The Student Loans Company (SLC) was set up in 1989 as a non-profit Government owned organisation to provide financial assistance to the students in colleges and universities in the UK. SLC plays a vital role to support supporting the higher education. Departments for Education (DfE, England), Education and Skills (DfES, Wales), Department for the Economy (DfEcon, Northern Ireland), and Education and Lifelong Learning (DELL, Scotland) are the key departments of SLC to take care of diverse concerns of students studying at different levels. SLC services about 1.8 million loan applications/year in addition to responding to 4.5 million phone calls to borrow. In addition to this Govt.’s body, the numbers of direct lenders also provide student loans at an affordable annual percentage rate. Therefore, numbers of options exist to continue to study up to any level; still, many students experience some problems in getting adequate financial support.
Student Loan Problems:
A recent study says that student loan harms mental health, career prospects and personal life for several years. It continues to disturb their personal life even after they complete higher study and get the job. Owing a large amount of loan delivers negative impact on career decisions. It affects even the retirement plans and home buying plans. Many times, pending loan amount dithers the students to start up a venture as a small business. Student loan also harms the person’s financial wellbeing leading him to lower net worth level. According to Prof. Claire Callender of the UCL Institute of Education and Birkbeck, “The number of students depending on student debt to pay higher education expenses is rising fast.”
What Is Going On With Student Loan?
According to a report released on Aug 2017, the total student debt has crossed the milestone of £100bn, and, the figure is expected to touch £330bn within a few years by the middle of the century. The cost of studying at university takes a lifetime to pay the debt. Average debt for poor UK households is expected to be £53,000 soon. The interest rates, admin charges, retrospective charges and penalties are the key concerns of students that often annoyed them. Fines introduced in April 2016 provoked the uproar at all levels. The bureaucratic nightmare is also a serious concern of students. The value of outstanding student loans reached up to £105 billion in March 2018. The UK Government expects that 30% full-time undergraduates will repay the debt in full.
Five Myths That Often Cerate Solve Student Loan Problems
- Myth – The interest rate of student debt does not matter
- Myth – Interest rates applicable during the study period is low
- Myth – Increased earning wouldn’t affect the repayment
- Myth – The repayment period won’t change
- Myth – I can’t pay it earlier; so, why should I bother to repay?
How to solve Student Loan Problems:
The task is not as simple as it seems because you know the intensity of challenge that you face during and post education. You don’t know how much time you will take to get a job and to repay the debt. The task of repaying the student loan at the earliest to save big can be divided into two phases: managing money during the course/training and repaying the student loan after starting earning.
Four Tips to Manage Debt Amount during Course / Training:
- Pick the best bank account – Choose the best student bank account offering all the key benefits and few things to disturb your mental peace.
- Plan a budget – Completing the study within a minimum loan is tough without having a perfect plan to use the borrowed money.
- Balance the work during the study – By joining a part-time job during the study is a good idea to lower the burden of education loan; however, it is important to maintain a balance between the work and study.
- Manage the existing debts – Having multiple debts is not a rare thing; many of us have 2-3 loans from different sources. Instead of panicking about the existing debts, find a feasible way to manage repayments.
Repaying the Student Loan When You Start Earning:
- First thing is to work out how much debt you owe. Survey reports state that 3 in 5 students do not know the exact loan amount they owe and what the interest rate they will pay. Many students don’t know what the amount part they have to repay after graduation. Student loans are comprised of tuition fee loan, maintenance loan, top-up grants etc. The student loan is not repayable until you start earning £25,000.
- Budgeting the monthly expenses has always been a decent way to repay the debt at the earliest. Every time you do budgeting, you will find some expenses that you can avoid. Never cross the weekly cash limits.
- Are you a savvy student? If not limit the expenses by using maximum Govt.’s benefits like discounts on travel. Sign up for UNiDAYS or NUS card to get additional discounts across the numbers of retailers including fashion, health & fitness, entertainment etc.
UK Govt. provides adequate financial help for the students through multiple channels but also makes you responsible to repay the debts on the time. Online direct lenders also support your career plans by offering no guarantor secured or unsecured student loans. Just the perfect repayment plan with commitment can help you enjoy the lending facility.