What is a Student Loan?

Not everyone is aware of what is a student loan? Student loans, as the name implies, are available to students who require help with living costs while studying.

Student loans are part of the government's financial support package for degree only students embarking on a course of higher education. For most students, a student loan is their largest single source of income. So unless you have very generous parents, you will need to apply.

Regardless of where you are studying, if you are from England and Wales you will apply to your Local Education Authority using an HE1 form. They will then calculate how much you're entitled to receiving ? as well as working out whether you need to pay tuition fees.

They will then send you back a form that you need to forward to the Student Loans Company (the government organisation that administers your student loan) who will process your application. This usually takes a month, so make sure you get the paperwork done well in advance of the start of term.

Although it is only a loan, you'll never be able to borrow money more cheaply, so it's the most cost-effective way of borrowing money while you're studying to pay for all those bills. The interest charged is only equal to the rate of inflation.

Unlike support towards tuition fees, you have to repay any loans. The Student Loan is repaid after you graduate (or after you leave the course, should you leave before completing). Repayments are calculated on a sliding scale and are repaid monthly directly to the Student Loan Company.

Should your salary fall below £10,000 payments are suspended until you earn above this figure again whereupon you will recommence payments. Interest on the Student Loan is calculated at a preferential rate which is far lower than any commercial bank loan rates.

Loans have the unfortunate tendency to mount up your debt. If you take the full £4,000 a year for three years that means you'll be £12,000 in debt by the end of your course ? and if you're on a longer degree programme, that total could be even higher.

You may freely reprint this article provided the author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.



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