Student loan: how is it repaid? – Challenges

Housing, tuition fees, food purchases, transportation… studies can be financed. And, of course, when you get your bac, you can’t pay rent or enroll in a school. Several solutions are then available for those who embark on a student course of study. Some receive direct or indirect help from their parents. Either they have put the money aside so that their child will have the means to cover current expenses, or they help him by giving him the necessary funds when needed, or they provide him with accommodation. But not all parents can fund all of their children’s studies. Future students who find themselves in this situation have no choice but to find money elsewhere. While some municipalities have set a minimum income for students, this is not the case everywhere and is generally insufficient. Others sacrifice their free time for a student job. However, in these tough times with restrictions in bars, restaurants and nightclubs, it has become difficult to find a side job. With the health crisis, students may therefore be forced into debt. Hence a student loan is the preferred solution.

Student loan principle

A student loan is a consumer credit that allows you to free up a certain amount of money, in order to pay entrance fees to school or simply to finance the running expenses of a young person’s life during the period of his studies. You should know that the terms and conditions of availing a student loan depend on the requested bank. It is generally necessary to be between 18 and 30 years of age and justify their citizenship as well as their education. The rate is often reduced compared to traditional credit and up to 120,000 euros can sometimes be borrowed. It is important to determine your financing needs as accurately as possible during your studies, as well as determine your income and when you have to return to working life, in order to adapt a student loan and its repayment plan. Because the whole point of this type of loan is that the repayment of the student loan is deferred compared to his subscription, unlike other credits. In addition, you will have to provide a guarantor to the bank that is able to pay the monthly installments if you cannot afford it. If no one you know can be secured, you can still consider getting a government-guaranteed student loan.

Should you pay off your student loan at a partial or full discount?

As we just mentioned, by taking out a student loan, you will not have to repay the borrowed capital for the duration of your studies, within five years. But if capital makes up the bulk of credit, it is not the only element to be taken into consideration. Borrowing generates interest so that the bank can be compensated. This will also encourage you to get borrower insurance. These costs, which depend on the rates applied, the term of the loan and of course the required capital, can include a schedule that begins once the loan is obtained. This is called partial discounting. Expenses to consider in your monthly budget. To avoid paying a very high monthly premium while you are studying, you can choose the total deductible. In this case, the repayment of interest will be deferred as the repayment of the principal will be deferred. You will only have to pay the insurance, if you have it. If this solution seems more interesting, it is nevertheless more expensive. In effect, interest accrues and the total cost of credit increases. That is why it is advisable, if possible, to choose a partial discount.

Can you pay off your student loan immediately or early?

If the basic principle of a student loan is not to have to pay off released principal immediately and wait for graduation and placement, a student loan is a fairly flexible formula where you can ask for your monthly payments to be made once the credit is opened. This can be an interesting solution to pay a high registration fee, but alternate paid. However, for this, the income must be up to three times the amount of monthly payments. And sometimes an inheritance, a very profitable assignment, or any gain may allow you to pay off your existing balance. It is possible with this type of loan thanks to Scrivener Law. Personal loan holders can already repay all or part of their loan without compensation, provided that this clause is included in the loan contract.

(writing agency hREF)

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