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STUDENT LOANS HELP & ADVICE

Financial Assistance

Financial Assistance for Tertiary Education is a requirement by a number of students. Your credit rating/credit history is of major importance as most financial institutions assess your credit rating and ability to satisfy your loan obligation prior to determining approval of your application. Applications may be made to a number of financial institutions in your country.

Government Loans

Government Loans are available in most countries. The Australian Government offers assistance to students by providing a scheme known as The Higher Education Commonwealth Support HECS - HELP. The HECS scheme gives financial assistance by providing a reduced rate to cover the students' tuition fees. OS-HELP supports Commonwealth under-graduates. Maximum borrowing in most courses does not exceed $80,000.

The United States of America have two types of loans available - subsidized and unsubsidized. The difference being that the interest incurred during the term of the subsidized loan is paid by the government whereas an unsubsidized loan, although your payments may not be payable until you graduate, accrue interest charges during the term of the agreement.

If you qualify for the subsidized loan there are two types - Perkins Loans (which are for students with exceptional financial need) or Stafford Loans which generally attract a higher fixed interest rate. As there is only a six-month grace period after graduation before payments commence on the loan, it is important that a student commence paid employment as soon as possible

Be aware that once you take out a student loan, if you fail in your payments, it will follow you for life. Student loan debts cannot be disregarded in a bankruptcy court. Only under extenuating circumstances will the Federal Government cancel all or part of an educational loan. This practice is known as Loan Forgiveness, to qualify you must perform volunteer work, military service, teach or practice medicine in certain areas of the community or meet other criteria specified by the forgiveness program.

A survey administered by the scholarship-matching website, Fast Web, found that nearly half of student loan applications were being denied. According to the survey, one of the primary reasons for students to utilize private loans is that they already have adopted the Federal Stafford Loan. A number of private education loan programs have multiple repayment options which allow the borrower to decrease their monthly payments for a given period of time. An alternative to refinancing private education would be through an outside line of credit or home equity loan. It is advisable that you thoroughly check with your current lender before committing to any loan.

Private / Bank Loans

Your government assistance application may fail. If so, a bank loan could be another option. There may be a shortfall in a HECS funded loan and this would not provide sufficient available funds for your course or general living expenses. Interest rates are generally much higher than government loans and it should be remembered that you do need to be careful when contemplating such an additional loan. Generally speaking, it is wise that your loan repayments do not exceed more than 10% of your expected monthly income after you graduate - to exceed this scale of repayments may result in financial difficulty.

Additional Government Assitance

Additional Government Assistance is provided in some countries, known as a Youth or Student Allowance. The main reason is to encourage teenagers to enter a higher education system. It would be wise to check if your government provides this assistance.

Institution Assistance / Bursaries

A bursary is a non-repayable education support scheme available from universities and colleges and is available to a wide range of students. Check with your nominated university or college as to whether they have this scheme in place and if you are eligible to apply. Universities in the UK offer at least a minimum bursary payment whilst you are receiving a full Maintenance Grant or Special Support Grant - these grants do not require repayment.

Student Credit Cards

Student Credit Cards offer new-found freedom to a student. With this comes responsibility whereby the credit card holder is required to maintain regular payments to the credit card company. Although you are required only to make a minimum monthly payment, it is a wise plan to pay in addition to this figure each month.

Managing Your Payments

It is recommended that you give consideration and particular attention to your current debt situation - as an example, you could have a credit card balance attracting a 17% interest rate, a car loan with a 12% rate and a student loan at 9%. Ideally, the loan attracting the highest interest rate should be paid out first - some lenders offer a reduction rate if your loan payments are paid electronically monthly. A reduction, no matter how small is a great advantage; in addition and an even greater reduction if you make weekly or fortnightly payments, so do your research. Sometimes an interest rate reduction is just not enough and you will need to consider consolidating your debts into one easy to manage repayment. Some lenders offer to consolidate private student loans and this may be a viable option if the interest rate is not too high.