Many have attained a degree through the help of Student Loans. Although there are disadvantages of Student Loans there are benefits of Student Loans and why student loans are worth it. Many say the disadvantages of Student loans outweighs its benefits but you will be able to decide once you read this article till the end.
In this article, you will discover, the benefits of Student Loans, why Student Loans are important, the disadvantages of Student Loans, why Student Loans are worth it and lots more.
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Things you need to know about Student Loans
Most students are scared of taking a loan for their academics. But here is the fact, there is nothing a good advice can’t fix. This knowledge will help you make decisions;
You only repay when you earn over £25,000
Stop worrying about how you will repay a student loan if you struggle to find well-paid employment post-graduation. You won’t be required to pay anything back you are earning over £25,000. You then only pay back a proportion (9%) of everything you earn which is over that amount.
It gets wiped out after 30 years
You’re not saddled with student debt for life. In fact, even if you’ve not paid it all back, then whatever is outstanding is wiped out after 30 years. If you pay it off on time Good! it’s gone. If you never earn enough to pay it back, then there’s no need to panic.
The Government sets the interest rates
Student loans have their interest rates set by the Government. Interest is charged from day 1. However, it’s interesting to note that the interest charged is set in accordance with your income and your study period.
Loans aren’t just for undergraduate full-timers
Part time students and post-graduates can also access student loans. However, it’s not quite as straight forward as the full-time undergraduates. Part-timers need to be studying for a minimum of 25% of a full-time course. Then they are eligible for both tuition fee loans and maintenance loans too.
Student loans don’t just cover tuition fees
It’s all very well to know that your tuition fees are covered but you need to eat and have a roof over your head. To further complicate things, some universities and some courses don’t allow term-time working to enable you to support yourself.
However, you can also get maintenance loans which are also paid back in exactly the same way as the tuition fee loan. The amount of maintenance loan you are eligible to varies, with household income being a big factor to what you are entitled to.
There are deadlines for applying
You can’t easily rock up the day before you head to university without having sorted out your loans. If you want to ensure you have the maintenance part of your loan in your bank account prior to the start of the autumn term, then you need to adhere to the application deadlines. These are set for the year and differ by country. If you miss the deadlines, then don’t worry. You can still apply up to 9 months following the start of the course but you won’t necessarily get the money in time for when you need it.
But hey?! Before you go securing a student loan, you might want to consider answer the question in your head “why are Student loans important? ” So just before you take a decision, let’s take a look at that
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Are Student Loans worth it?
Let’s say you’ve considered the option of securing a loan for your Academics. Either from the Federal Government or from private Institutions. At this point perhaps, you might be wondering Why Student Loans are worth it. Here’s are some benefits of student loans
Well yes! Student loans are worth it. Here are some of the reasons you should consider it a worthwhile venture
- Student loans helps students earn a degree and pay back when they commence work.
- Student Loans come at affordable terms (i.e. they can’t be collateralized or charged interest)
- Education Loans are always the right approach to paying for a higher education for those who can’t afford higher education.
- Student borrowers can also take advantage of more lenient repayment plans and schedules that are exclusive to education loans, and unlike the more restrictive terms and conditions of a standard loan.
- College Student Loans Are Flexible
- Most Loans, can be deferred.
- It reduces the number of touts and uneducated people in the society.
- Most education loans offer lower interest rates, deferred payment options and a repayment grace period following graduation.
- Invariably, student loans help many achieve their academic dreams.
- Reduced interest rates when borrowers enroll in automatic payment plans. Many lenders offer discounted interest rates when borrowers opt to have loan payments electronically deducted from their checking accounts.
- Interest rate reductions for borrowers who have made complete and timely payments over a predetermined period of time.
- Reduced interest rates for borrowers with cosigners. Cosigner release may be available after borrower has made a number of on time payments.
- Waiving of origination fees.
- No penalties or fees for early repayment.
Whatever is worth training a child through high school is worth it. So yes! Obtaining a student loan is worth it. Okay so let’s consider the disadvantages of Federal Student loans and the bad things about Student Loans.
Disadvantages of Student Loans
As much as obtaining a student loan is a great option for many people. It literally is the worst option for others. But for you, you can only decide if you weigh the positives and negatives, the advantages and disadvantages, and make the decision that seems best for your own personal situation.
Of course, there are reasons why student loans are great. But there are also some bad things about Student loans. In this section we will be looking at the bad things about Student loans. Or in simple terms, the disadvantages of Student loans be it federal or private.
Student loans can be expensive.
When you borrow student loans to pay for your college education, you don’t just have to pay back the amount that you borrowed: You have to pay back interest as well. This can range anywhere from 4.45–7% for federal student loans (in 2018) to a high of 11–15% for private student loans.
Education loans mean you start out life with debt.
If you rely on student loans to pay for college, that means that you will start out your adult life in debt. Sure, that college education might mean that you earn more money over your lifetime than someone with only a high school diploma. But, depending on how much you borrow, it could mean for a difficult first few years out of college, especially if, like millions of other college graduates, you’re having a hard time finding a job that pays enough money to allow you to live a decent life.
Paying off student loans means putting off other life goals.
The average monthly student loan payment in 2018 is $351. But many college graduates find themselves paying higher amounts, especially those who had to take out private student loans. That’s money that you could be using to save for a down payment on a house, finance a wedding, or invest for your long-term financial goals. If you’ve got a substantial amount of student loan debt, you might not be able to start pursuing these other financial goals until after you’ve finished paying off your debt, and at that point you’ll have to double your efforts to make up for lost time.
It’s almost impossible to get rid of student loans if you can’t pay.
If you can’t afford to pay your mortgage, your credit card bills, your car loans, or your medical bills, it might seem like your world is coming to an end. But you’ve got one final emergency valve you can release in those situations which can allow you to dig your way out of debt: You can declare bankruptcy. Luckily, there are some other ways of getting rid of student loan debt through discharge and forgiveness.
Defaulting on your student loans can tank your credit score.
I mentioned above that responsibly using student loans can help you build a credit history and, with it, a credit score that will be useful throughout your life. But the alternative also holds true: If you are irresponsible with your student loan use, you can cause significant damage to your credit score.
Considering this bad things about Student loans it’s wise that you carefully make your decision. To go a little further, consider this below.
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Mistakes to Avoid When Taking Out Student Loans
- Do not fail to exhaust free money first.
- Do not take too much debt.
- It’s advisable you go for a Federal Student Loan other than a private Student Loan
- Do not misunderstand the difference between fixed and variable interest rates.
- Do not consign to a loan without understanding the consequences.
Conclusion
Sequel to popular opinion, you have a choice to make. The choice of securing a student loan is in your hand. We hope you found this article very helpful and enlightening.
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