Student Loans

Is a Student loan Really Worthwhile?

There seems to be debates in the news most weeks about whether students are getting a good deal from their student loans and from their degrees. It probably means that some people keep changing their mind as to whether they think it is the right thing to do or not. It is a big decision but as long as you understand how student loans work then you should be able to make it fairly easily without having to worry about these scare mongering news articles.

A student loan is given to anyone who is doing a degree that has not had a grant or loan in the past. The loan will cover the course fees as well as provide some money towards the cost of living as well. It is unlikely to be enough to cover everything though, so it may be that the student will have to get a job to help out or their parents may have to give them some money to help them out too.

The loan does not have to be repaid until the course ends and the graduate needs to be earning over a certain amount of money before they will have to make any repayments on their loan. This is obviously different to regular loans like payday loans which need to be paid back immediately. This amount may change with inflation and so it will not be a fixed amount. However, it is set to be a level of a reasonable salary where it is felt that the graduate will be able to afford to start to repay the loan. The repayment is then taken out of their tax code which means that they do not have to remember to repay and it does not count as a loan repayment officially so should not influence your chances of borrowing money elsewhere. After thirty years, if the loan has not been repaid, then it gets written off. At the moment about three quarters of students do not manage to repay their loan in full. This means that any concerns about interest rates or increase in fees are actually irrelevant as they will not be paying for these anyway.

This means that when you see a headline saying how students struggle to repay loans, interest rates are high or students are getting bad return on their investment into education, this actually is not really important to most students. If you are not going to pay back the full amount then the interest rate is not relevant to you either. Getting value from your degree may also not be an issue. If it does not lead to a career in the area that you trained, it may still help you get a job and have skills that you can use to help you to progress.

It is worth thinking through whether getting a degree will help you in the future. If you are not sure what you want to do in the future, then it could much better to wait and try out a few jobs first. The degree will always be there as an option of you want it, but if you get one too quickly you may regret it. This is because the funding for a degree is only available once. Once you have used it, then you will not be able to get it again. This means that if you choose the wring course then you will end up with a degree that you do not want to use and the only way you will have of doing another one is to pay yourself or use an expensive career development loan, which you do have to pay back regardless of whether you are working or not.

There are also those people that think that it is much better to do a degree course that is vocational and will lead to a job. This means that you will get you a qualification that can lead to you being trained for something specific such as teaching. However, just because the loan has to be repaid does not mean that you should be making sure that you get a job that pays well so that you can afford it. Remember, the payments that you make depend on the amount that you earn and this means that if you do end up in a job that does not pay very well, you will just not have to pay back so much.

This can be a problem for those people who feel that they really should repay all of their loan, but most people feel that they need only pay back which is required of them and so do not mind if they are not paying back everything that they borrowed.