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Student Debt and Student Loans |
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Submitted by Martin Martinez
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The statistics show that more and more students are graduating from university with significant debt. The debt levels are growing year on year and many students will be paying them off for years after they graduate. It seems that the consumer addiction to credit and spending has effected the student population just as much as every one else. The fact that most students are not earning anything, and are living either on funds provided by their parents, or on money borrowed, they continue to spend millions each year.
These costs are spread over a variety of areas. Accommodation and other living expenses represent the largest portion of the expenditure. Added to this is travel to and from university, holiday and summer travel expenses, and entertainment. While students are generally financially responsible and not as out of control as many patents would have you think, they do continue to spend a huge proportion of their money on entertainment and socialising.
Employment
Many students will also be working part time during their studies. There are a lot of jobs available and finding one is not a problem for most students who genuinely want one. Employers recognise their flexibility and willingness to work unsociable hours and also that they will generally be happy to accept minimum or close to minimum wage. Therefore, while the jobs are there, they generally pay little, and students who work more than 10-20 hours a week are probably putting a serious strain on their studies and risking their future chances of success.
Most student debt is comprised of student loans. The student loans company based on eligibility criteria provides these. These loans are cheaper than credit that is available on the market from high street banks and have other significant advantages for students. Firstly, students will not have to start repaying the loans until they are earning a set minimum amount, currently around the £15,000 mark. Then there is also the fact that loan repayments are calculated according to earnings levels and are therefore always reasonably affordable. Students are giving as much time as they need to repay the loans and the interest rates, as said before, are very favourable.
Overdrafts
As well as these student loans however, many students will also have other forms of debt. Most banks are offering interest free student overdrafts of up to £2,000 and there are not many students who do not use this up pretty quickly. Then there are bank loans, store cards and credit cards. All of these represent a significant amount of debt that most students are living with.
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