How Much of a Gamble is a Student Loan?

Student loans are a difficult type of debt. Many people see them as good debt because they help you towards a career. So they are an investment in your future and therefore you will be able to possibly get a better job as a result of it. This could mean that you will be able to get a larger salary for the rest of your working life, which could have a huge impact on your future.

When university education was free, it was a pretty easy decision in that anyone that was clever enough should go to university and get the degree so that they could get a better job. However, now that students have to pay for their university education, they tend to use a loan and then pay it back using their tax code over up to 30 years. This usually just covers the cost of the course and perhaps rent but they often need to make this up, with some students being able to claim a small grant and the rest having to find the money through working part time or being given it by their parents.

When the loans first came out it was said that they looked pretty good. The repayments were pretty small and depended on how much you earned so if you were not earning you would not have to repay anything and as your income rose you would have to pay more, with the outstanding amount being written off after 30 years. However, the rules have been changed over the years and different students have had different terms with regards to the amount of interest charged and how much they have to pay back. This is likely to change as governments change and possibly even within the same government depending on the economic situation, their policies etc. There was even a case where the terms were changed for graduates who were already making repayments and so they then had to pay back more than they had been told they would have to. This is something no lender would be able to do, but the government managed to. This means that even if you sign up to a student loan and think that you are getting a reasonable deal, you could find that things will change in the future.

As well as the risk of taking a loan and wondering what effect that might have on your future there is also the risk of wasting time. An undergraduate course will usually take three years and afterwards you should have a qualification. However, to decide whether you got good value for money from your loan, will depend on what sort of job you can get afterwards. If you cannot get a graduate job then you may end up doing a job that could have done without having studied for the degree and it may therefore mean that you end up with a lot of debt for nothing. You may also find that certain degrees with prepare you for a specific job but there may be others that are much more general and will mean that you need further qualifications in order to use that degree to carve a career path.

Of course, many people will see the worth of the degree to stretch beyond your salary earning potential. They may feel that just having had the experience of student life is well worth the money. This is very much down to personal opinion and also may depend on the university that you attend and the course that you do. The more involved you get with the activities on offer form the university, the better value for money you are likely to get. Make sure that you attend all lectures and classes on offer to you but also get involved in the extra-curricular activities which are likely to be free or cheap.

It can actually be quite difficult to tell whether you will get good value for money from your degree. Finding out exactly what you get form your course with regards to teaching time, employment prospects and extra-curricular on offer could help you to make the decision. However, it is also worth thinking about the reasons why you are doing the course and whether you will actually achieve your goal by the end of it. Consider whether having to make the repayments will be a big burden in the future or whether the potential increase in salary ill make it worthwhile.

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