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Student Loan

Should The Government Cancel all Student Loan Debt?

Studying is a financially and time-consuming period. Not every student is lucky enough to have their parents contribute or even pay for their studies. Most students overcome this problem with a part-time job.

A student’s budget is often high based on the cost of studying especially in higher classes. Luckily, they can access Student loans which not only cover tuition fees but also house rent, transport, teaching materials, or food.

Without understanding how these loans work, you won’t know exactly what you’re getting into. But you need to decide for yourself if you should take out certain types of student loans.

What is a Student loan?

Student loans are money that a student (or student’s family) borrows from the government or a private lender to pay for higher education, whether it be a school, a college, or a university.

The aim of the student loan system is to create opportunities for all young people to participate in higher education, regardless of the financial capacity of the individual or their family, and to ensure the long-term sustainability of universal, mass, and quality higher education for the development of their country economy.

Advantages of a student loans

  • Early repayment without penalties
  • You will have the opportunity to focus on your studies
  • Repayment of the loan will not begin until after your graduation
  • You can study without financial stress

Disadvantages of student loans

  • Interest rates are high
  • Mail may arrive at home if repayment is delayed
  • The limit is small
  • Be blacklisted

How to choose your bank?

Do not wait until the last moment to start the process: take the time to find out so that you can prepare your file as soon as you receive your school certificate. Select several banks and request an appointment. That does not bind you to anything. This will make it easier for you to compare the proposed rates, insurance rates, application fees, reimbursement terms, etc. You can also contact your school. Some of them have partnerships that can entitle you to benefits.

Conditions to get a student loan

The age of the applicant must be between 18 and 28 years old, or even 30 years old in some cases. 
Some student loan offers are accessible to people over 30 returning to training,
Provide proof of student status by providing a card or certificate from the institution,
Must have a bank account where you wish to take out a student loan.

Pay attention to these certain things that can increase the bills:

Application fees : some banks offer them to you, find out well before signing.
Insurance : as with any loan, the bank will make you pay for insurance. It's up to you to negotiate and pay attention to the contract before signing.
The interest rate : the rates depend on the economic situation, but each bank can apply its own rates. 
Do your prospecting work well to find what suits you best. 

How to withdraw a student loan?

Transferring the student loan amount to your own account. You have two options:

Make a withdrawal agreement with your bank, and the items will be automatically credited to your account
Make a partial purchase agreement with the bank, in which case you should make a request to withdraw the loan when you want the loan in your account

The student loan can be withdrawn from your account at any time during the academic year.

Also Read: Canada Top 105 Universities List and Detail

Can an international student get a student loan in the US?

Student aid from the U.S. federal government is only available to non-citizens in a few cases, detailed here.

You can get a loan in the US without a cosigner but the ROI will be pretty high. Companies such as Prodigy and Leap Finance do give such loans.

If you have a cosigner then the rates can be quite low and you can save a lot.

Finally, there are private loans. We generally discourage using private loans even for US citizens because they have fewer borrower protections and no forgiveness options, but they do exist. But they need a US-based co-signer to get a private loan and even then, the rates/terms may not be good.

What is Student Loan Tax credit?

Student loan interest payments qualify for federal and provincial tax credits. If you are an ON resident they effectively reduce your interest rate by 20.05%. (But paying no interest is better than paying reduced interest.)

If you can’t use them in the year you acquire them you can use them in one of the next 5 years.

What is Student Loan Consolidation?

Consolidated loans are private loans and as such get none of the features of federally backed student loans.

If you have multiple student loans you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated.

A Direct Consolidation Loan allows you to consolidate multiple federal education loans into one loan at no cost to you.

Through your completion of the free Federal Direct Consolidation Loan Application and Promissory Note, you will confirm the loans that you want to consolidate and agree to repay the new Direct Consolidation Loan.

Once the consolidation is complete, you will have a single monthly payment on the new Direct Consolidation Loan instead of multiple monthly payments on the loans you consolidated.

Should the government cancel all student loan debt?

If a poor person goes to a state school and incurs $20,000 in debt allowing them to get a $40k/yr job and a rich person goes to Yale or something and gets $200,000k in debt to get a $130,000/yr job, the Yale grad has been given 10x the money to a person who’s going to be able to pay their debt off extremely quickly.

It does potentially increase the gap between the poor and those with college degrees. Unfortunately, there is no guarantee that student loan forgiveness is attached with a fix to poverty.

You could eliminate the entire debt of half of all borrowers, for 488 Billion. But eliminating all student loan debt would be 1350 Billion /1.35 Trillion.

People should be allowed to go to school for free if they can’t afford it. If they can afford it, let them pay their debt off.

We shouldn’t give 10x more money to the people who don’t need it.

How does the refund work?

You can pay off all of your debt after you finish your studies. However, you can repay only interest during your studies.

Again, the duration of the refund varies from bank to bank but also depends on your situation. It can be spread over 10 years. Reimbursement is established in two phases: the deferred phase, during your studies, then the amortization phase, when you enter working life.

During your studies, you can choose to pay nothing back or to start paying your interest and insurance premium.

At the end of your studies and therefore at the start of your working life, you will then have to repay your entire loan monthly, as well as the interest if it has not already been disbursed during the deferred phase.

Is student debt in the US worse than in the UK?

The UK student loans are basically just a 9% tax on what you earn over 26K for everyone except the richest people.

US student debt is completely incomparable to UK student debt: UK debt is essentially a graduate tax by any other name, and doesn’t really function as a debt: repayments are based on your income, it gets wiped after a fixed period, etc. US student debt just is normal debt, but worse: repayments are based on the amount of debt, it doesn’t get wiped by bankruptcy, etc.

In the UK, if you earn around £8000 above the repayment threshold (currently £26,575, so we’re assuming a salary of ~£35k) you’ll pay back 9% of that £8000 in a year, which does work out as £60/month.

But obviously, it’s entirely salary dependent, and you could be paying as much as £550/month if you’re on £100k/year, as little as £3.19/month if you’re on £27k/year, or even nothing at all if you’re paid £26k or less.

Public Opinion on Student Loan

P1

Since no one else is giving an argument against it, here I’ll go with a simple one:

  1. Student loan debt is mostly held by the middle and upper class. That might not sound right, but it’s true. Look it up. So student loan “forgiveness” is welfare for the rich(er).
  2. Many people who have either worked hard to pay off their debt or even skipped college because of the cost get nothing. Student loan debt forgiveness rewards bad choices.
  3. It just adds more to the national debt, which is going to be paid off somehow. You don’t want to pay for your college? Your grandchildren will.
P2

Why should the government pay it? Students should pay their debts like people have been doing for centuries. People should know what happens when you take a loan. You have to pay it. What about all the people who already paid their debts and worked 2 or 3 jobs to get through college? What’s the point of going to college if you can’t even pay your debts?

P3

People have been able to pay off their debt in the past because college prices were comparatively much cheaper. Over the past few decades, college prices have risen exponentially more than wages leading to more people taking out loans and going into debt. Loans do lead to debt, but a lot of people don’t have a realistic choice. It’s either go into a field that is already over-saturated, or take out a loan. What’s the point of taxes if they aren’t used to help the taxpayer?

Frequently Asked Questions:

Can a scholarship student get a loan?

The scholarship has nothing to do with the student loan. Indeed, it is financial aid, but it does not require any reimbursement (except in the event of a breach of commitments on the part of the student). You can very well apply for a loan by being a scholarship holder. The bank will look at the situation of your guarantor(s), therefore, your scholarship has nothing to do with the decision to give you a student loan.

Does it cost to apply for a student loan?

The guarantee decision is available free of charge, but your bank may charge a fee for withdrawing the loan according to its price list.

You can visit Federal Student Aid (FAFSA), the official website of the U.S. Department of Education, to stay up to date on student loan information.

Should I take a student loan in 2022!

Well, if you take out student loans you have to pay it back with interest. If you are in a situation where you need money and don’t have a source of income, a student loan might be a good option. If you are just taking the money for the sake of it, don’t bother.

If not taking loans means financial stress/anxiety or it means you can’t treat yourself or afford to live instead of just surviving, then it might be worth just taking the loan and dealing with any repayments later. Don’t get burnt out before you’ve even started your career!

Student Loans or Working Full-Time, what is the good option!

Okay, so I took the student Loan route and I have lots of friends who didn’t.

I think it depends on like how much you think you need to take out. Are you going to a public uni where it’s a bit cheaper.

You kind of have to weigh out whether you can see yourself being able to make payments afterwards. The less you can take out the better obviously.

Consider the usual time it takes to find a job in your field / how much you’re projected to earn.

Also, if you do take out loans, maybe start networking and applying to jobs before you graduate if you can. Talk to people who’ve graduated to see if you can connect ahead of time.

I think it makes sense too that as you advance in a degree it gets more difficult so, I mean it’s not an entirely bad thing too.

If you can apply through financial aid I think it’s worth seeing what your options are and then deciding.

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