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While it is understood that individuals who pursue higher education will ultimately have to repay the cost of their degree, recent reports have suggested that this is not always the case. According the opinion of one senior civil servant, 40% of all new loans issued to students are unlikely to ever be repaid, thanks in part to an unstable job market and a lack of opportunities for graduates.
Repaying your Student Loan: Top Tips for Students
Under British law, graduates are only required to begin repaying their debt once their earnings have reached a certain threshold. This is to avoid a scenario where individuals are encumbered with unmanageable levels of personal debt, while it also minimises the impact that economic decline has on graduates and qualifying students. That said, there are also steps that each individual student can take to help repay their loan as quickly and as efficiently as possible: –
Compromise when Choosing your Degree Subject and Field of Study
When selecting your degree subject, we are always drawn towards topics that interest us and excite our imagination. While this is to be encouraged, however, it is also important to temper this according to the economic state and the potential within your desired industry. After all, there is little point in selecting a topic that has no affiliation with a specific industry, while you may also look to avoid studying subjects that are related to declining market sectors. Your ultimate choice may have to be a compromise, as you look to balance passion and interest with common sense.
Understand your Financial Commitment
While a student loan may be unsecured and boast much less stringent terms than alternative forms of credit, it still needs to be considered in pure financial terms. It is therefore important that you fully comprehend your financial commitment, paying particular attention to your cumulative debt total and the terms regarding its repayment. This can help you to determine all future costs and the potential ROI (return on investment) of pursuing higher education, which may in turn help you to determine the right field of study for your future.
Spend Frugally at All Times
When we apply for standard loans, we tend to borrow the exact amount that we need and spend this accordingly. Student finance is different, however, as individuals are applying for a predetermined amount of capital that may be more or less than they require. If your student loan tends to pay you more than you require, you should look to save this in a separate account that can contribute towards future repayments. If you find yourself struggling, however, you should refrain from applying for additional long-term credit and instead consider lower-cost lenders such as Smart Pig.