Plan on borrowing a Student Loan for College
Do you Plan to take on a Student Loan for College
Education is believed to lead to success and at the macroeconomic level and It is believed that a higher educated population brings about higher growth and other social advantages - In this sense student loan for college is a blessing in disguise for students who are contemplating going to college but do not have enough funds to do so. To put it simply, it enhances access to education. Student loan for college is different from other forms of loans in the sense that it has a lower interest rate and repayment conditions are very flexible in terms of timing as well as methods of pay back. Student loans normally form part of a whole package including other forms of financial help like grants and scholarships.
In the US, the government dedicates a large portion of its budget towards loans to students. Apart from public loans, there are equally private student loans for college, offered basically by the private sector. Supporters of student loans argue that these loans give access to education thereby ensuring a more educated workforce since without those loans students may not have joined colleges. On the other hand, student loans act as a burden on the economy and tax payers since they are being financed mainly by government revenue.
Critique
In addition, student loan for college has been criticized since lenders do not take account of unforeseen hardships by students thereby preventing or delaying the repayment of the loan. For example, if students are unable to find jobs they are still required to pay the loans at the time stipulated in the contract, unless other conditions have been made. Also, under bankruptcy laws in US, it is difficult to discharge student loans even if the student is bankrupt.
If the current economic situation is considered, the students might not be able to find a job after graduating from college. Consequently this will impact on the repayment abilities of the students. Recent economic trends have been responsible in accentuating the problem of student debt whereby students take student loan for college in the hope of securing a better future but end up entangled in the vicious circle of debt whereby they are not only unable to pay the principal amount borrowed but also the interest rate accruing over the years. The issue of student debt is likely to worsen in the coming years since there is the expectation of a likely hike in student fees. According to student bodies in the UK, such rate hikes are expected to leave graduates in approximately £40,000 of debt.
In the light of the above it can therefore be deduced that though student loans for college are seen as a favor on students, it is not a zero sum game. It equally involves risks which may worsen the situation of the students in the future.
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