As student debt keeps going up and students look for other ways to deal with it, student and graduate loans are becoming more popular. The good news is that it's usually possible to get a loan for college or graduate school without having to show a steady income or offer security. This is very helpful, since most students won't have either of these things. Student and graduate loans also have pretty low interest rates, especially when you consider that they are not backed by anything. Be careful, though, because these loans may force the student into a long-term relationship with the lender that may not be the best one.
Student Debt
On average, students today leave college with about £14,000 in debt. More than two-thirds of all students have to borrow money, and the Student Loan Company is responsible for most of this debt. Once the student starts working, he or she will have to pay back the loans, but the interest rates are capped at 1% above the base rate, which is a very good rate. This is a very low interest rate compared to most other ways to borrow money.
It's easy to understand how to pay back. Starting in April after graduation, 9% of all earnings over GBP15,000 are taken out automatically to pay back the Student Loan Company. The loans are very safe because they aren't due until you get a job and start making a steady salary.
Graduate Loans
On the other hand, graduate loans cost a lot more than student loans. Most of the time, these loans are offered after graduation, when student loans are no longer available, to help pay for the costs of making the change from being a student to being an adult. This could mean finding a new place to live, getting clothes for work, etc. Graduate loans will also be used to pay back student overdrafts, which are a feature of all student bank accounts. The important thing to remember is that graduate loans are much more expensive than student loans, even though they are less expensive than personal loans.
Employment
If you already have a job, your new employer may be able to lend you money at a much better rate. This is an alternative to getting a loan for college. Career development loans are another option. People who are studying for certain professional qualifications, such as medicine or law, can get these loans. There are a lot of these on the high street.
It's easy to get out of hand with debt when you're in school. It's easy to get the loan, and the payments are so far away that they don't seem real. But if you have a lot of student debt, it can be hard to buy a house or save for a pension when you start working. Even though student debt keeps going up, trends show that graduates are doing better and relying less on loans and more on their salaries to meet their needs.
