Student loans are available to people undertaking higher education, to help them cover the costs of their courses and course materials and to provide them with money to live on while they are unable to do full time work. They are available for students doing degrees and post graduate courses at physical universities, and in some cases those doing online degrees.
While some people are reluctant to get in to debt, for a lot of students, particularly those whose families can’t afford to subsidize their studies or mature students looking to change careers, a student loan can be the only thing that makes it possible for them to be able to afford higher education. The phrase “investment in your future” may be something of a cliché, but that is the idea of a student loan – you take it out so you can study now, then you pay it back in the future when (hopefully) thanks to your new qualifications, you can earn more money.
These types of loans differ from ordinary bank loans in a number of very significant ways. Firstly, it is much easier to be accepted for a student loan if you can prove you are or will be in full time higher education than it is for a normal bank loan. Normal bank loans, especially in the current economic climate, can be hard to get if your credit history isn’t perfect, and a lot of young people going off to college won’t have had a chance to build up a sufficient credit rating to borrow the kinds of sums of money needed to put yourself through school.
Secondly, they have a far more attractive rate of interest, which is great because often you won’t start paying them back for several years (because you don’t start until after you finish your degree or other course), so a good deal on the interest rate is really helpful.
Additionally, under certain circumstances such as you remaining in full time education or falling into severe financial hardship, it is easier to defer repayments on a student loan than on other types of regular loan. This can help if you decide to stay on and do a Masters or PhD or if you find it difficult to find work after university. With normal loans deferment can seriously damage your credit rating, making it harder to get credit products such as cards and a mortgage in future. With student loan deferments, this is not the case.
There are several different types of student loans, and it is worth familiarizing yourself with these before you begin to apply. Common ones you will hear about include Perkins Loans, Stafford Loans, and PLUS loans.
Remember that after you leave full time education you will be expected to start paying the loans back, so borrow only what you need and make sure you have a plan in place to begin working to be able to afford the repayments after college.