There has always been a debate that is student loans are good or bad? The argument can be tricky because in some situations personal loans for students can be helpful for the students who are not strong financial families or they want to do things on their own. But on other hand, people also say that student loan companies exploit the situations of such students to increase their wealth. Also, the student loan company burden the student even before they have started their practical life. But like every other thing, the personal loan for students comes with its pros and cons. It usually depends on the people that how they tackle such situations and how they make the best of these situations. Here we will be looking into the pros and cons of personal loans for students. So firstly, we will start with the pros;
Pros:
1) Higher education or university education is expensive in developed countries. Specifically, if you are aiming for top-notch universities in your county then you must have a pocket to pay their expenses. In that case, the student loan companies help those students to avail themselves of the personal loan facility at a lesser rate than the bank. This provides equal opportunity to the brilliant students who have the potential to study in a top-notch university. We have seen that there are many higher executives of bigger corporations that have humble beginnings but with such help, they have made it through.
2) The student loan companies have provided loans with ease. You don’t have to show any credit history, also there is no collateral for the loan. The personal loan for students has significantly lower interest rates than the bank loan. The procedure is also short and you don’t have to run for it.
3) The student loan companies also provide ample time for students to pay back their loans. For instance, usually, the payback period starts from the completion of the university degree or after securing the job. This means during the education years; the students don’t have to worry about loan payment and they can just focus on their education. After getting the job, they will start paying the loan back. In terms of inflation adjustment, they might be paying less in comparison to present value.
Cons
1) Looking to the other side of the picture. As soon as the student gets into practical life, they have a loan to pay. They will start their practical life with the liability. They might not be able to enjoy their first 4-5 years of job because all their savings will be going to the student loan companies. This might put extra pressure on the students who may not be able to acquire high paid jobs because in that case, their major income is going into loan payment.
2) In the end, the loan is a loan. Rather it’s a car loan or a student loan. You have to pay back and in case you get behind in payment then you have to pay extra in form of late fees.