Student And Graduate Loans
By Joseph Kenny, Thu Dec 8th

Student and graduate loans are becoming more popular as studentdebt continues to rise and students seek alternative ways ofdealing with it. The good news is that student or graduate loansare generally available without the need to show steady incomeor offer security. This is extremely helpful, as most studentswill not have either of these. Student and graduate loans alsocome at relatively good interest rates, particularly havingregard to the fact that they are completely unsecured. The thingto be wary of is that such loans may lock the student into along-term relationship with the lender that may not be the mostadvantageous one.

Student Debt

Students leaving college today average about £14,000 in debt.More than two thirds of all students must borrow and the vastmajority of this debt takes comes from special loans provided bythe Student Loan Company. Once the student begins working, theloans will be repaid, but the interest rates are capped at thehighly attractive rate of 1% above base rate. This is very lowcompared to most sources of credit available.

The rules for repayment are simple. Beginning in the April aftergraduation, 9% of all earnings above £15,000 are automaticallytaken to repay the Student Loan Company. The loans are thereforevery safe, as they are only due once you join the workforce andbegin to earn a steady salary.

Graduate Loans

Graduate loans on the other hand, are far more expensive

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thanstudent loans. These loans are generally offered on graduation,when student loans are no longer available, to cover the costsof transition from student life to working life. This mayinclude finding a new place to live, buying work clothes etc.Graduate loans will also be used to pay off student overdrafts,which are offered to all students as standard features of theirbank accounts. The point to remember is that while graduateloans are relatively cheap when compared to personal loans, theyare far more expensive than student loans.

Employment

If you have a job lined up, you may be able to borrow money fromyour new employer at a far better rate. This is one alternativeto graduate loans. Another alternative is career developmentloans, which are available to those studying for certainprofessional qualifications such as medicine or law. Many highstreet lenders offer these.

It can be very easy to lose control of debt while studying. Thecredit is very easy to obtain and repayments so far into thefuture that they don't seem real. However, high student debt canseriously hamper attempts to buy a home once you enter theworkforce, or save for a pension. The trends show that whilestudent debt continues to increase, graduates are faring better,relying less on borrowing and more on salaries, to meet theirneeds.

About the author:Joseph Kenny is the webmaster of the loan information siteshttp://www.selectloans.co.uk/ and alsohttp://www.ukpersonalloanstore.co.uk. At the Personal Loan Storeyou can find all the different loan types explained.