They say that an investment in knowledge pays the best interest. This is the very reason why we must invest in education. However, education is not free for everyone and not all have enough resources to obtain it. While some can afford it with their financial resources, there are those who need to work to pay for it and there are some who need to resort to loans to finance it. A sad reality we have to face.
Thankfully, most governments today see the need to help willing students who cannot afford to pay outright by designing student loan programs. Student loan help finance post-secondary education and pay the associated fees which include tuition fee, books and supplies, and other miscellaneous expenses. It differs per country and distinct from other types of loans with its significantly lower interest rate and relaxed payment terms.
If you think you are one of those who need to avail of student loan, then apply for it. But if you have enough resources to finance your education, better not. For those who have existing student loans and planning to avail one in the future, this site lists some effective ways to manage student loan debt. Student loan is not really a bad thing, it has good and and bad sides. Let’s list some!
The Good Sides: Pros of Student Loan
- It can let you get through the financial troubles of college education
Yes, student loans can fill the financial gap during your student years and let you finance your education be it on undergraduate or graduate degree. Remember that your degree is priceless and will help you land a good paying job and build a career in the future. There is no limit on the return and it will surely pay your loans and more. It is definitely a worthy investment.
- Can be used for other purposes
While the primary purpose of student loan is for educational expenses such as tuition fee, books and supplies, board and lodging, and other miscellaneous expenses during your college years, you can also use it for other purposes. It will be beneficial to avail of discounts, promos or scholarship your school offers so you’ll have spare from the loans which you can use for other stuff. Be wise on the use of it though, it would be good to use it on small business or other investment opportunities to make it grow.
- Significantly lower interest rates
Student loan differs from other financial loan for it is designed exclusively for the purpose of financing post-secondary education thus offering significantly lower interest rates. Interest rates vary per country and the rate for undergraduates is also lower compare to graduate programs.
- Flexible and relaxed payment terms
Unlike the other type of loans which requires the borrower to start paying immediately upon loan takeout, payment terms for student loan are usually flexible and relaxed. Some even allow borrower to pay only when you can and even after you graduate.
- Helps you build your credit rating
Unknown to many, every individual on their right age has corresponding credit rating. It is a record that guides financial institution to asses the credit worthiness of an individual. A good credit standing means easier approval of your loans in the future be it a home loan, business loan, car loan and what not. If you avail of a student loan and religiously pay it, you help build your good credit rating. It will be easier for you to apply for other type of loans early on.
The Bad Sides: Cons of Student Loan
- It is still a loan that earns interest
A loan, whatever name you call it is still a loan. All loans incur interest and the longer you hold the loan, the higher the interest. It can be expensive in the long run so borrow wisely!
- It burdens you with debt in your early life
You are supposed to be in your hay days and enjoying your teenage years, partying with friends, traveling somewhere and making the most of your life. Sadly, student loan will burden you with debt in your early life so you have to be more responsible with your expenses.
- It means sacrificing other life goals and priorities to pay off your loans
The loans you incurred while studying will always be at the back of your mind in every decision you will take. New phone? A road trip? A car? Nah!!! No for now! I’d rather pay for my loan first.
- You cannot simply get away with it
If you are thinking of not paying your loan, think again. You cannot simply get away with and rid of it for it will haunt you! Defaulting your loans will tarnish your credit score early on and will affect your standing and credit reputation for life. It will be hard or impossible for you to avail of other type of loans in the future.