How to Finance your Education

An education is something that many of us take for granted and it can lead us to a great future. However, these days an education is not free after the age of eighteen and this means that if you do want to give yourself the opportunity to have a high earning potential, you will need to pay for your education. There are some opportunities for loans and grants and it is worth understanding what they are so that you can assess the options available to you.

Most people know about student loans. These are available to cover four years of higher education and they will cover the total amount of course fees and also give some money towards living expenses, with the exact amount being means tested depending on parental income. Even a full loan may not be enough to cover rent and food so the difference is expected to be made up by the parents giving the children money or the students working or using savings that they have already. The loans can seem like a scary option because they get the student into debt but they are not really a loan and similar schemes in other countries are not even called loans. After graduating they will be repaid in the tax code of the graduate and whether they have to pay and how much is determined by their earnings, so this is means tested again. After thirty years the agreement ends which means that three quarters of graduates do not pay back the full amount that they have borrowed as they have not earned enough money. These tend to be the most common option for financing higher education.

If you have already had four years’ worth of student loans or you had a student grant in the past, then you will not be eligible for a student loan. This means that if you want to do a second degree or a PhD or any other additional higher education, then you will need to look at alternative ways to finance the course. This can be available in the form of a Career Development Loan. These are offered to anyone who can prove that a course they are undertaking ill improve their career. They are very different to student loans though. They have a high interest rate and repayments have to be made even if you have no income. They are very much like any other type of loan, but they may be dearer.

It is possible that it could be cheaper to fund education, if you cannot get a student loan, through a personal loan. It is worth comparing prices to see whether there are any available that you can take out, considering you could be in full time study and therefore not earning that will be cheaper. One major to consider though is repayments. With a career development loan you do not have to start making repayments until you finish your course. With a personal loan you will have to start making repayments right away and therefore will need to find money each month to be able to do this. This could mean that you will have to borrow more money, over a longer term so that you have enough spare to make the repayments, which could end up making the loan pretty expensive. It is worth doing some calculations to see if it really will be worth it.

You could consider saving up and using your own money to pay rather than getting a loan. If a student loan is available, then this may not be the best option as you may end up paying less by using a student loan if you do not pay it back in full. Unless you think that you will be a top earner for all of the thirty years after you graduate, it is unlikely that you will repay the full loan. However, it is always worth saving up some money towards it as you never know when you may need more money than the loan provides. It is also a good healthy habit to get into and you may want it to pay for other big purchases in the future even if you do not use it for your education such as a deposit on a home or a car.

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