The Ins and Outs of Getting a Student Loan

Student loans are those that are provided specifically to those that are interested in pursuing a post-secondary education. Without the help of student loans, many young adults in the UK would have no way of financing their educations and pursuing the career of their interest. As such, it should come to no surprise that the total amount of money loaned to students in England alone was £2.9 million for the 2006-2007 school year.

Qualifying for a Student Loan

In order to obtain for a student loan in the UK, you will need to meet a few qualifications. First, you must be pursuing your education on a full time basis. In addition, you must be able to demonstrate that you are unable to support yourself while going to school without the assistance of a student loan. Third, the money you borrow must be used strictly for educational purposes.

Types of Student Loans

Student loans may be obtained through the government or through some private businesses. There are two basic types of loans that you may qualify for through either of these avenues. The first, called the maintenance loan, provides you with money to help you defray the costs of school term vacations and holidays. The other, referred to as the fee loan, pays for the costs of your tuition.

What to Expect from a Student Loan

The amount of money you receive from a student loan will vary according to the type of student loan you receive and your individual needs. With a maintenance loan, for example, the amount of money you receive will be determined by your household income as well as by your proximity to the school of your choice. A fee loan, on the other hand, is prorated in accordance with the terms of your enrollment and the tuition you will be expected to pay while attending the school.

Repaying a Student Loan

When repaying a student loan, you will have to pay interest charges in addition to the amount you borrowed. In the UK, the current interest rate on student loans is only 2.4%. This interest rate is determined according to the inflation rate of the country and lending institutions are obligated to use the current interest rates when computing student loan repayments.

If you acquire a student loan, you will not be expected to start repaying the loan until six months after you have graduated. If you drop out and fail to complete the coursework, you are still obligated to repay the student loan. Furthermore, you cannot file bankruptcy in order to avoid your obligation of repaying a student loan. At the same time, there are some limitations as to how the lending institution can collect the money. For example, there is an age limit of 60 on student loans, which means you are no longer expected to repay the loan once you reach this age. Similarly, you are no longer obligated to repay the loan after 25 years have passed from the date you were given the loan.