Making the decision to apply for a student loan is undoubtedly a big one. To help ease your mind, we’ve addressed a few common queries about things like what’s involved, what the process looks like, and how to make sure your decision is a financially viable one.
- What exactly is a student loan?
Like any other personal loan, a student loan consists of borrowing a certain amount of money which is then repaid with interest in monthly, fortnightly or weekly instalments. While Australia has the Higher Education Loan Program (HELP) in place to cover partial or total tuition costs upfront, some students may opt for extra financial assistance outside of this system via a student loan.
- Do I need to book an appointment with a lender?
When it comes to applying student loans online, making the overall process much smoother. Of course, you can also speak directly with a lender before submitting your application if you feel the need to address specific questions pertaining to your circumstances.
- What types of student loans are available?
Firstly, student loans can typically be divided into two categories: secure and unsecure. Secure loans require the provision of an asset in order to guarantee the loan – this may be a car or equity in a home. The attachment of an asset usually means these types of loans come with lower rates. Unsecure loans are more flexible and do not require the guarantee of an asset, therefore the rates are usually higher.
Types of such loans also depend on your specific situation, such as whether you’re undertaking a vocation and education training course (VET), an undergraduate degree, or a post-graduate degree.
- Am I eligible for a student loan?
Eligibility criteria can range greatly between financial institutions, but generally speaking, student loans in Australia are available to applicants who are 18 years of age, or if not, can provide a guarantor. Employment and income are also taken into account, however as students have vastly different lifestyles and financial situations to full-time workers, student loans are much more flexible than other types of personal loans in order to cater for lower incomes and fewer assets.
- Is a student loan the right option for me?
Student loans certainly come with their fair share of pros and cons, which should be weighed up before committing oneself. On the plus side, student loans usually offer benefits such as discounted interest rates and waived fees. However, the amount lent is usually smaller than other types of personal loans, and there may be stricter rules around terms and repayments.
In general, if you’re already struggling to keep up with everyday expenses, throwing loan repayments into the mix may not be the most sensible way forward. An online personal loan calculator can be a smart way of working out whether you can afford a student loan in the long run.
- What can I use a student loan for?
Student loans are designed as education tool, designed to help alleviate some of the financial crunch that comes with the student lifestyle. As such, these types of loans are typically granted with the expectation that they will be used for study-related expenses including:
- Course fees
- Student accommodation costs
- Textbooks and related materials