Student loans are facilities extended to post-secondary education students to cover their tuition, books expenses, and general living expenses. This type of loan is meant to guarantee continuous education to citizens without worrying about the costs accrued thereto. The interest incurred differs from other loans, and in fact, it is cheaper than regular loans. Repayment of a student loan is deferred until the student has successfully completed school. By and large, the laws regarding qualification and payment of the loan differ from one jurisdiction to another.
Governments around the globe have set up a list of places to get student loans and schemes through which graduates who have secured jobs can commence repaying the loans. However many students have stated the fact they are burdened by loans that they did not pursue with explicit knowledge of the repercussions. This is due to the fact most of these student loans are ensued by parents and students at a very young age. But this does not negate the benefits of securing a student loan to guarantee completion of your studies. The benefits of such a loan are enlisted as follows;
No credit history requirements
Unlike other loans, student loans do not lay emphasis on the creditworthiness of a particular student. In fact, disadvantaged students are more likely to secure student loans than those that are slightly privileged.
Through relevant institutions, governments across the world have created a conducive environment for graduates to repay comfortably without undue pressure. Governments have hereby allowed grace periods to allow students not to repay immediately after securing income earning employment. Further, graduates can apply formally for deferment of the loans based on various reasons.
Credit score enhancement
Graduates that undertake to settle their student loans immediately after securing jobs can build their credit score due to established creditworthiness. The act of prompt payment is a sign of responsibility and ability to settle future credit within the set parameters. Therefore such students can obtain bigger loans to finance their expenditures like housing and cars.
Student loans come early in life, and therefore the student can take some valuable lessons regarding financial responsibility. The process of repayment is cumbersome and pitiful, but this may act as a platform for education and an opportunity to seize financial literacy especially regarding credit management.
Interest rate reduction
In essence, student loans are meant to promote education and therefore governments have taken steps to alleviate the burden of repayment. In this regard, the interest on this loans is deductible from income hence a reduced burden of taxation.