Is it Worth Borrowing Money for your Education?

Most of us get our basic schooling for free, usually up to the age of eighteen years old. Then higher education tends to be something that has to be paid for. This can vary a lot from country to country and some will offer some free education particularly for those on a lower income. However, if you do have to pay for your education, you need to work out whether it is worth doings so or not.

The idea of getting into debt can be scary for a lot of people and the fact that university costs so much money and then as well as the price of the course and resources there is often living expenses as well to pay, means that it can be a very high amount of money to have to borrow. If you took out a normal loan for this, the interest could pile up over the years that it take sto pay it back and it could be extremely costly. However, this will depend on the type of loan that you get.

If you are entitled to a student loan then you could find that you will be pretty well off. Student loans in the UK are organised by the government and at the moment the rules are set up so that repayments do not need to be made until earnings reach a certain level and then they come out of the tax code. This way of organising it means that really you just pay more tax to repay the education rather than actually paying back a loan and how much you repay is determined by your income. So if you are on a low income you will not have to pay any back at all. After thirty years the debt is wiped out, so unless you have been a high income earner for the whole of those thirty years, the chances are that you will not repay everything anyway. This includes the interest on the loan which over three quarters of students are unlikely to repay.

However, some people will not be entitled to a student loan. These will be those that have already had one or who had a grant in the days before student loans were available. Also loans are only available to cover four years of study, so you will not be able to get them to cover the cost of a PhD or a second degree. This means that if you want to pay for these you will have to look for a Career Development Loan. These are specially designed to cover a course of study that will lead to a career improvement. They have high interest though and do not work like student loans as they have regular repayments and you have to pay the full amount back in full regardless of whether you are earning. So as soon as your course ends you will be expected to start making the repayments on the loan. This can be expensive and will also affect your ability to borrow for other things, such as a mortgage as those loan repayments will be considered when looking at this as well as income.

Some people decide to save up and pay for their education that way. They may be lucky enough to have families that can help them out or they work for a while and save up first. This can be a great way to avoid borrowing but it is something which is not an option for everyone. A student loan, can be better than saving up as you may not have to repay all of it and so it could be better to go with this option rather than paying it outright anyway.

It is worth considering whether you do think that the education is worth the loan though. However, you are paying for it, you need to decide whether you think that it offers good value for money. Think about what the course offers and what opportunities it will provide you with. Many people are not turning to vocational courses as they are sure that they will get a job at the end of the course and feel that this will be the best way to ensure that they make best use of their degree.

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