If you are currently at university or are thinking of heading off to university in the not so distant future, something you will have probably come across is student loans. This is a loan you take out that covers your tuition and maintenance fees. If you are living in the UK, your tuition loan will cover all of your tuition fees and your maintenance loan will vary depending on a variety of different factors (click here to find out more information).
However, regardless of the country you live in, some students may decide not to take out a loan (although these are few and far between). But regardless of whether you think a student loan is or isn't for you, it is always important to weigh up the pros and cons of taking out a student loan. Student loans (like any other loan) can be quite a scary thing if you don't fully understand them and when you first see the figure of how much you are going to be taking out (and therefore having to pay back), it can put a lot of stress on you. But hopefully, this post is going to reassure you of any worries you have regarding student loans and will give you all the pros and cons you need to consider before deciding whether or not to take out this loan.
Let's get the negatives out of the way first because I always like to think you should get the bad news out of the way first before delivering the good news:
1. You don't always get the amount you need to be able to live off and may not be able to rely on handouts from your parents and may not have time to work to make up the difference
2. It means you will have a percentage taken out of your pay packet every month, therefore leaving you with less take-home pay and could have an impact on your overall finances
3. An interest is added to your loan once you start repaying it, which means you aren't just repaying the loan you took out, but also the interest added on top of that
4. Mortgage lenders may take the fact you are having to repay this loan into account when deciding whether to give you a mortgage, which could affect your ability to buy your own home
5. Not everyone will finish their degree. Many people will start university and then realise it's not for them. Whilst this is okay, it means you'll end up without a degree, which could possibly affect your employment, and having to pay back a debt
However, for every con to student loans, there is a pro that makes taking this loan out all the more worthwhile:
1. If you're living in the UK, you don't have to start repaying your loan until you earn above a certain amount (£27,295 a year) and the average UK graduate salary is £24,000, so you may be able to earn a salary for a year or so without having to pay your loan back
2. Another thing about student loans in the UK is if you haven't fully re-payed it back after 30 years, the loan is immediately wiped. Your chances of re-paying it all back are so slim anyway that you won't have that added pressure of having to fully pay your loan off
3. Regarding tuition fees, the student loans company takes care of sending out the appropriate payments at the right time, so it's one less thing for you to worry about
4. They give you peace of mind in terms of having money. Everyone who goes to university is entitled to a student loan and what should often happen is your maintenance loan will come in just before your rent payment (if you're living away from home) is taken out, so you don't have to worry about not having enough money to cover your rent and/or other living expenses
5. They mean you can actually go to university. Before student loans, many people who wanted to go to university couldn't because they had no way of being able to afford it. Luckily, student loans have made university more accessible for people from all backgrounds to help them progress with their career goals.
If you want to learn more about the pros and cons of student loans, as well as how you can manage your student loan debt, take a look at this link, which provides you with all the information you need to know. And if any of you have any other pros and cons of student finance, please feel free to leave them in the comments below.
Love Beth xx