Student Loans

Should I Borrow more than my Student Loan to get me through University?

Many students find that their student loan is not enough to pay for everything that they need when they are at university. This means that it can be tempting for them to get another loan to help. This could be problematic so it is worth giving the idea a lot of thought.

About student loans

The amount of student loan that you can borrow differs between students. All students can borrow the value of their tuition fees but it is the maintenance loan which differs. The loan is calculated based on the income of the household that the student is living when they apply to university. If they come from a very low income family they may be able to get a grant as well as a full loan. However, as parental income increases; the amount of loan available decreases. Although this is not stated, it is because parents re expected to make up the short fall and those on a higher income are deemed to be able to afford to be able to do this. However, many parents do not realise that they are expected to do this and some will not be able to afford to do it anyway. Just because they have a higher income does not mean that they have money available to give to their children, it may be that they have lots of loan repayments, high rent, or high bills. Some parents will save up for this, so thart they can manage but because it is not well-known that there is this expectation then parents may not have saved up and so they may not be able to financially help their children or they will only be able to help them a little bit.

Borrowing extra money

This is why it is possible that students will consider borrowing extra. Now, students will not have a good credit record as they are young and will not have a large income, if any. Therefore borrowing can be tricky and they are likely to pay more money in interest because they are more of a risk.

It can be easy to think that all borrowing works like a student loan when you are a student, but unfortunately it does not. A student loan only has to be repaid once the graduate is working, which means that they do not have to worry about finding the money while they are studying. Other loans do not work this way and repayments will need to be made right away. With a credit card, for example, repayments can be small but the interest keeps on being added on. You will pay the interest each month and maybe a small amount of the balance but you will not be repaying very much of the loan. It is also easy to forget how much you have been paying in interest if you keep paying it each month and the loan can seem cheaper somehow.

Other loan options may not be available to students as they may need collateral or an income in order to get them. Therefore it is really wise to see whether there are alternatives first.

Alternatives to borrowing

Although a student loan is a good idea, it is good debt and in most cases worthwhile taking out, if you need extra money then it can be wise to look for alternatives to borrowing. Firstly, you might like to point out to your parents that they are expected to contribute to your living expenses. You could suggest that they give you the money that they will save by you no longer living with them (assuming you are moving away) and that this would help you. You could calculate the shortfall and see if they can help you with it. Of course, some parents may not have the money and others may not be prepared to help.

If this is the case then it could be wise for the student to get a job. They might be able to get holiday work, perhaps while in sixth form or in the holidays so that they can save up some money to help. They may also be able to work while at university depending on the course that they are doing. It may be that they only have to study for a few hours a day and therefore will have time to work as well.

Students will also need to be very careful about what they are spending their money on. Although they will want to have fun, they need to prioritise so that they spend money only on necessities. Therefore paying rent, utilities and food is most important. Then paying or books and study aids with things like clothing, entertainment etc being unnecessary. You are not a student for long and so you should be able to go without getting many new things until you graduate and can afford to buy them.

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