Why a Personal Loan is a Bad Idea for Students

A student loan is specifically designed for students and will allow them to pay their course fees and living expenses while they are studying. However, the loans are often not enough money to cover things like bills, food, and books as well. It can therefore be tempting to borrow extra money to cover the costs of these things. This is not a good idea though.

A student loan is seen by most people as a means to an end. You are investing in your education and therefore the loan is a sensible one. It will take a long time to pay back but usually the interest is reasonable so this can be manageable.

Some students can be tempted to take on an extra loan to help them with the costs of student living. This could be a personal loan or perhaps a credit card or overdraft, if they cannot organise a loan. This could provide them with enough money to cover all of their costs and perhaps to have a bit of extra fun as well. This can be great and it can really add to the student experience if you have a bit more money to play with. However, unlike a student loan you will be expected to start making repayment immediately and with no income, this can be difficult.

Although student loans are a form of debt, they do not feel that much like a normal loan as they are a way of getting an education and a job. If you have an additional loan, this is more like borrowing and it can start to make you think that it is okay to borrow money for things like food and bills or to go overdrawn or use a credit card. You will begin to normalise these sorts of things. This means that once you start work, you will still be happy with the idea of borrowing money. You will be able to borrow more, because you have an income and you could find that you will start finding it too easy to get into debt and it could lead to a big problem in the future.

Many students will do a part time job to help pay their way. This will give them vital work experience and skills that they will not get anywhere else It looks good on the CV, that they have worked and teaches them how they have to work for their money. Moving on from university not only will they find that it is easier to get a job, compared to someone without work experience but that it will have given them useful skills to cope with work as well.

Many students do rely on their parents to help them out financially when they are students. It is almost expected that parents contribute something towards helping their children out. For lower income families there is a grant available, which is worth applying for but those that are well off have no opportunity to get this and therefore need to find the equivalent money elsewhere and parents would seem to be the only option. However, not all parents are able to do this and this is why some students need to find other ways to get money. Borrowing is not wise and there is no guarantee that there will be an available job. It may therefore be wise to make sure that you have enough savings before you start. There is no need to rush straight to university on leaving school or college. You can start work and build up some savings so that you can more easily manage the costs of university. If you stay living with your parents, you will not have to pay out so much as if you moved out of home and you can work hard on working and saving money. Even a year’s worth of savings could really make a huge difference and could mean that you will not have to borrow any extra money on top of your student loan. The work experience could also give you a better chance of finding a part time job while you are studying.

So if you are a student and have a student loan, it is best not to borrow any extra money. Try to save up before you go, get a part-time job or ask parents to help you out. If you do borrow money you will find that it is extremely expensive, could lead to a bad borrowing habit in later life and could mean that you struggle with bad debts before you even start your first part time job. So try hard to not put yourself in this situation; not to borrow extra money, as you will feel better and have a brighter future without so much debt hanging over you.

Leave a Comment

Your email address will not be published. Required fields are marked *