20 Student Finance Myths Debunked

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20 Student Finance myths debunked

• When it comes to pursuing higher education,
  there's no shortage of information, advice, and,
  unfortunately, myths about student finance. As
  aspiring students and their families navigate the
  complex landscape of college funding, it's
  crucial to separate fact from fiction.
• In this comprehensive guide, we will dive deep
  into 15 common student finance myths, debunking
  misconceptions that could potentially shape your
  academic and financial future. Whether you are
  planning to attend college or already enrolled,
  it's time to demystify the world of student
  finance and make informed decisions that can lead
  to a brighter, debt-free tomorrow.
• What Are the Top 20 Student Finance Myths?
• While preparing yourself to get a student loan
  for your higher education, you may have heard a
  lot of myths about loans and finances. But no
  worries, all your doubts will be cleared in the
  section provided below
• Myth 1 You Need to be Wealthy to go to
  university
• The first and most common myth that you must have
  heard before entering college or applying for a
  student loan is you need to be wealthy to go to
  the University. But this is not true. You just
  need to maintain a basic standard of living and
  provide a guarantee statement that you will pay
  your loan debt back.
• If you successfully do that, then there is no way
  the University and the bank will deny to help you
  pursue your further studies. Apart from the
  student loan option, there are a lot of ways
  through which you can finance your education,
  even if you are not that wealthy. You can finance
  your education through grants and scholarships.
• Myth 2 You Will We Paying Off Student Debt Your
  Whole Life

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Are you worried about taking student loans for
higher education because you will have to keep
paying your debt your whole life? Well, there is
nothing to worry about at all. You will not have
to pay debt throughout your life. It is a
myth. Even if you have taken a big loan, your
debt paying period will depend solely on your
loan type. If you have taken a government loan,
then the paying period will eventually wipe out
after 30 to 40 years of paying. This clearly
indicates that you will not have to pay till the
moment you grow old. However, the situation,
terms and conditions can differ. If you have
taken a loan from a private lender, then the time
ratio may change. Overall, the average student
loan repayment period is approximately ten years.
However, there are many ways to shorten your
repayment period, such as making extra payments
or refinancing your loans. Myth 3 US and UK
Student Debt is the Worst in the World Yes, the
loan interest in the US and UK are high as
compared to other countries, but that doesnt
mean that you will have to stake all your money
to keep paying your loan and its
interest. Majorly, all student loans are funded
by the government. But if you have taken a loan
from private lenders, you may face difficulty
paying back the money. However, the lenders may
provide you with some other alternatives or
considerations. Myth 4 The More the Debts, the
Higher You Pay If your University/ tuition fee is
high, then you will graduate with more debt. But
you will not have to pay more. Instead, you will
pay less than other previous students because you
are not obliged to pay based on the debt you have
but based on your current earnings. If you are
taking more debt for your education, then it
means you are pursuing your education from a good
University. So, after completing your education,
you will get highly paid jobs in USA, and if you
have a good job, you will earn more and have to
pay according to your earnings. Myth 5 You Have
to Start Paying Back Your Student Loans As Soon
As You Graduate This is one of the most common
myths that you have heard before or during taking
a student loan. But this is entirely false. You
will have to pay your debts, but not as soon as
you complete your education. Instead, you will
have to start paying after getting a good job and
a salary over the repayment threshold. While
taking a loan, the loan providing bank will
provide you with some additional time. After you
graduate, there is a grace period before you have
to start making student loan payments. The grace
period varies depending on the type of loan. In
case you drop out of your University during the
mid-term, then you will have to immediately repay
the loan that covers the remaining part of the
term. Myth 6 Student Loan Debt Will Ruin Your
Credit Score
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This myth is completely false. Student loan debt
will not ruin your credit score instead, it can
actually help your credit score if you make your
payments on time. However, if you miss payments,
then your credit score will be negatively
affected. But no worries, the student loan debt
will not show up on your credit score report. So,
after completing your education, if you want to
take a loan for your house, then you can easily
do that. The only way the loan provider will know
about your student loan is if they ask you about
it during the loan application process. The main
reason behind finding out about your student loan
is because they want to check out your net
earnings. Myth 7 You Can't Get a Student Loan
If You Have Bad Credit You may have to face some
difficulty in getting a student loan with a bad
credit score. But it is not impossible. You can
apply for the loan if you have the proper
documents and other essential required
things. There are many student loan options
available for students with bad credit. But you
may have to pay a higher interest rate or get a
cosigner. However, these options solely depend on
your loan providers repayment terms and
conditions. Myth 8 The Government Keeps
Changing The Loans Interest Rate Getting a loan
is not an easy task, but understanding the loan
and its interest rate can be the toughest. But no
worries. We are here to guide you. When you see
changes in your loans interest rate, then is
understandable that you will blame the
government, but thats not true. The government
does not change the interest rate at its
convenience. As mentioned earlier, understanding
the loan and its interest rate is a topic that
can give you a headache. It is natural to react
and blame the wrong party. Lets understand the
topic in detail. The government may charge RPI
some percentage on your loan as an interest rate.
However, the RPI amount can increase or decrease
over time on its own. So, when you see the
interest rate has been increased, that means the
percentage the government has charged is the
same, but the RPI has gone up with
inflation. Myth 9 Debt Collectors Will Come If
You Don't Repay Your Student Loan No debt
collectors will come to you if you fail to repay
your student loan installment in any month. If
you are jobless or earning below the threshold,
then you will not have to pay your loan debt till
you are earning well. Along with that, you are
not responsible for paying your debt on your own
either. If you have a good job and earn well,
then every month, the debt money installment will
automatically be deducted from your salaried
account. However, it is advisable to keep an eye
on your bank statement and payslip to make sure
that the bank is not over-charging you or
deducting your money way too early. In case you
are self-employed and doing some sort of
business, then your debt amount will be
calculated when you file a self-assessment tax
return.
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All these situations state that you will only be
charged to pay your debt when you are capable of
paying. And it simply means that you will not be
haunted by any debt collectors. Myth 10 You Do
Not Have to Repay Your Student Loan If You Move
Abroad We all have wished this statement to be
true, but it is entirely false. No matter where
you move or stay, if you are earning more than
your repayment threshold, you cannot escape from
paying off your debt. So, before you move to
some other place, you will have to let your loan
financier know the place you are shifting to.
Apart from that, you will also have to set the
repayment amount with them based on your current
income. If you move abroad without settling
these things, then your loan debt will keep
adding on. This means once you return to your
place, you will have to pay all the backlogs or
round figure amount. So there is no way to
escape. Myth 11 You Can't Refinance Your
Student Loans Do not panic this statement is
wrong. You can refinance your student loans to
get a lower interest rate or shorter repayment
term. However, it is important to compare
different refinance offers to find the best one
for you. Just search your preferred bank, make a
visit, and check out the interest rate along with
other terms and conditions. Myth 12 You Can't
Get Highest Paid Jobs If You Have Student Loan
Debt This is a myth you must have heard while
pursuing your higher education. But this is
absolutely false. If you are taking a student
loan for your studies, then you must be going to
a good University. And after passing out from a
good University, you will surely get a good job
and a high salary based on your skills. So, no
need to panic or have a doubt. Just study hard,
work on your skills, and you will get a good
paying job through which you can repay your loan
debt. Myth 13 You Should Pay Off Your Student
Loan As Soon As Possible This statement is
entirely wrong. Paying off your student loan
early or late is something that completely
depends on you. However, there is an advantage of
paying the amount early. By settling your debt
early, you can reduce your interest amount. In
some cases, there are chances that you will have
to start paying off your added interest before
the debts get over. So, by paying the debt
amount early, you may get the disadvantage of
paying more money that you would not need to
pay. Myth 14 Your Parents Have Nothing to Do
With Your Finances at University
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No, whether you are eligible to get a student
loan or not mainly depends on your parent's
income. The government will only decide and
sanction your loan if your parents have a stable
and good income. According to a recent Student
Money Survey, more than 51 of parents pay the
initial student loan debt. Many of the students
do not pay a single penny to repay the loan
because their wealthy parents make all the
repayments. Myth 15 You Can't Retire If You
Have Student Loan Debt Your retirement has
nothing to do with your student loan debt. If you
are not able to work anymore, then you can retire
even if you have student loan debt. However, it
is important to plan for your retirement and make
sure you have enough savings to cover your living
expenses and student loan payments. Even after
retirement, you cannot escape from your debt. You
will have to pay it back at any cost, but yes,
you are not obliged to be trapped in something
you do not like. You are very much free to make
your own decisions. Myth 16 Your Student Loan
Will Stop You From Getting a Mortgage Your
mortgage application is slightly impacted by your
student loan repayments. However, there is less
chance that the provider will ever prevent you
from obtaining a mortgage. You will go through
an 'affordability check' while applying for a
mortgage. A mortgage lender will look at your
monthly income and expenses to determine how much
you can afford to pay each month. They will
determine how much money to lend you based on
that. You will technically be able to make a
lesser mortgage payment each month than you would
if you had no student loans because your loan
payments are deducted from your paycheck each
month. The amount you repay is, however,
incredibly negligible in the grand scheme of
things. So, there is a chance that there would
not be any huge difference, and it would not
affect your ability to get a mortgage. Myth 17
You Need to Pay for Master's Degrees
Yourself Just like for your graduation degree,
you can take a student/education loan to complete
your post-graduation degree. However, after
completing your graduation, if you are earning
well or if your family can afford to pay for your
master's, then you should do it by yourself. But
in case you cannot pay for it, then you should go
for a loan. The procedure would be similar. Myth
18 You Can't Get Rid of Student Loan Debt If You
Go Bankrupt In most cases, student loan debt
gets discharged in bankruptcy. Until the
situation is under control, you can pause your
payment and resume it soon after solving the
problem. However, it is important to consult with
a bankruptcy attorney to discuss your options.
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Myth 19 You Should Borrow As Much Money As You
Can For College You should not borrow money as
much as you want. To complete your education, you
should not entirely depend on student loans try
to use some savings to avoid extra repayment
because the more amount you take as a loan, the
more time you will have to invest. So, it is
important only to borrow as much money as you
need for college. Student loan debt can be a
burden, so it is essential to be careful about
how much you borrow. Myth 20 You Can't Travel
If You Have Student Loan Debt You can travel even
if you have student loan debt. Your traveling has
nothing to do with your loan. However, it is
important to budget for your travel expenses and
make sure you can continue to make your student
loan payments to avoid any repercussions.