Student loans

This part intends to give a general overview of student loans of the given member state. After positioning student loans in the general framework of loans and educational loans the most important characteristics of student loans are exposed.

Student loans

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1. Introduction

There are two types of loans namely a secured loan which enables a customer to borrow against some form of security and an unsecured loan wherein the customer can borrow up to the net annual income. In any case, before one applies for a personal loan or a home loan, one must certainly approach different banks for different initial information. You should also evaluate seriously your financial capability. It is very important that you take into consideration not only your current situation but also your future prospects. Ideally you should keep a safety margin for unexpected costs.

Reference should be made to the section dealing with ‘Mortgages’ in Dolceta Module 2

2. What should I do when I decide to apply for a loan?

Initially, you should approach the bank, and the bank official should give you the general terms and conditions applicable to the particular loan in question. The bank official will also ask you specific questions so that he can draw up a personalised offer capable of reflecting your personal requirements. You should also be given a generic quotation – indicating the annual repayments/terms and also the documentation required to conclude the application. This initial offer will summarise the important features of the personal loan or home loan.

By gathering the different information which the different banks offer you, you will be able to compare the different offers and decide which offer suits best your needs.

3. Should I opt for a short term or long term loan?

If you opt for a short terms loan, you will have higher monthly payments but you will pay less in total. In the case of a long term loan, you will pay less each month but more in total. However you should not make financial commitments unless you are sure that you will be able to afford the payments.

4. Will the Bank always accede to any request to grant a loan?

No, the bank will consider various issues before granting a loan. The Bank will grant a loan, only if it is certain that the amount requested can be covered. When the loan is granted, the bank will work out a plan of repayments based on one’s monthly income to ensure that not only the initial capital is recovered but also that interest is paid.

5. Student Loans

Banks are nowadays offering youths aged between 18 and 30 Study Schemes in the form of soft loans at subsidised rates of interest to further their studies abroad or to follow distance learning courses. Such loans provide an opportunity for all young people to participate in higher education as well giving them a certain independence from the family’s financial background.

Students over 18 years of age can avail themselves of these financial products. In assessing one’s request, the bank will consider the ability of the individual concerned and the applicant’s future potential.

The Bank will request specific documents such as a detailed CV, copies of qualifications, letter of acceptance from the relevant institute or university, letter of reference, a detailed breakdown of the expenses as well as a budget planner. Some banks may also request a guarantee to support the loan.

Students may also avail themselves of additional incentives such as exemption from bank charges for specific facilities e.g. standing order charges; exemption from processing fees usually levied for bank loans, overdraft facilities.

6. Weblinks

- Dolceta Module 2 – Section on Consumer Credit