Student Loan

Student loans are the most cost effective on the market, and in keeping with that, one of the most popular too. If you’re young and considering further education, it’s pretty likely that at some point or another, you’ll need to take out a student loan.

The government has done its best to provide supervision to the financial needs of students, and banks are doing the same with a wide range of student loans. The first thing to distinguish as a separator between a student loan and any other is the interest rates. They’re as low as they come.

These kind of loans only grow at the inflation rate, and as a precautionary measure, the government has restricted any inflation rises from effective the rates too dramatically. The maximum possible interest that you’ll be paying on a student loan is 1% above the Bank of England’s national rates. Don’t worry about that though. You can expect to be enjoying repayment interest rates as low as 2%.

The great thing about such completive rates is that you don’t have to worry about paying off your debts in a hurry. Life as a student is tough at the best of times and the wallet can be threadbare on many occasions, so not having to worry about extreme interest rates in a major advantage. You only have to compare a student loan to the interest that you’d be paying on a 14.9% APR contract. The value soon shines through.

If you’re an under-graduate, you can borrow up to a maximum of £4,405 in a calendar year. This should be more than enough to take care of any financial difficulties. Those fortunate enough to live in London even receive an extra £1,500 bonus. Not bad for them!

So what are the major concerns with this type of loan? The most obvious worry would have to be that students don’t get too carried away with the low interest charges. University life, in particular, has the potential to spill out of hand with immense spending in a tiny period of time.

After your graduation, the government will automatically take 9% out of your earnings when you break the £15,000 salary mark. You don’t have to worry about arranging this. It’s all set up by the financial bigwigs and the money will be transferred directly from your wages. It can take a long while to clear debts, but with the interest hovering so low, you don’t need to worry about it too much.

Of course, having graduated university and moved in to employment, it’s unlikely that you’ll have the financial responsibilities that others will have. You should be able to make a serious dent on those debts and clear them in reasonably quick time.

Student loans are a forced deal for many young adults. It’s quite rare that teenagers will have sufficient funding to go through further education without having to call on help from a loan at some point. That’s not to say that it’s not possible. But if you’re looking for a loan which does more good than harm, the student loan is definitely it.