Student Loans

Student Loans – What you should know

Student loans work like this: A student and a parent (with an income) apply for a loan to the student, where the parent is required to pay the interest portion of the loan on a month-to-month basis while the student is studying. The capital amount sits in the student’s name, and the student is required to repay the loan through monthly installments upon graduating. The loan issuer (a bank, usually) ordinarily allows the student 3-6 months after graduating before they are required to start making repayments, and this term can sometimes be extended if you bring flowers for your banker. The idea with this is to give the student a fair opportunity to find a job after graduating. If, however, the free pass term expires, the parent (or whoever else stood surety for the loan) will be required to cover the repayments.

Are they good or are they bad?

It’s difficult to say whether funding your studies through a student loan is a good or bad idea, because it largely depends on the circumstances.

The bottom line: If not taking the loan would mean not studying, take the loan! Otherwise avoid it wherever possible.

It’s never a good idea to start life off with debt, but if you can get a leg up by doing so (ie: you gain a tertiary education), then it probably is a good idea. Just make sure you consider everything below.

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