Everything you should know about getting a loan to fund your degree

Applying to study overseas can be really stressful. Even harder, however, can be the question of how to find the money for it.

It’s no secret that an international education is extremely expensive.

Although loans are the most obvious option, to apply for a loan can be an arduous process, especially if you have never done anything like it before. 

These are designed to help you borrow enough money to fund your studies. You’ll be expected to pay off your loan bit by bit once you start working.

Some student loans even allow you to work a few years before paying back, giving you the chance to build your finances first. 

What exactly do you need to know about student loans, though? How do you begin to apply for a loan? Every country has their own specific conditions, but most offer some way for you to get a loan for your education. 

Here are some you can look into: 

Apply for a loan: Which should you choose?

Here’s what you should know about getting a student loan. Source: Daniel Boczarski/AFP

National student finance loans

Most countries will have a dedicated finance scheme in place for students. This is a set amount of money that’s put aside for students who need funding for their education.

Some may cover the entirety of your studies, while others will be capped at a specific amount. 

The UK is one such country with a student finance scheme. To apply, students have to first set up a student finance account and complete an online application.

Here, you’ll list down the institutions you’re applying to, the amount you need to cover your tuition fees, extra expenses, and more. 

Another aspect of the application is declaring your household income. This includes the income you get from your own savings, investments or property.

If you are under 25 and dependent on your parent(s), their income will also be included in this figure. 

This is to ensure that loans are distributed to students fairly. For example, if you are earning enough to pay for your education, you likely won’t be considered under the student finance scheme. 

Private student loans

If you are unable to secure a government loan, you can have a look at those being offered by private sources. These are usually banks that are willing to give you a loan to fund your studies. 

Here, you can apply for a loan directly from each bank or lender’s website. Make sure that you apply after you’ve gotten all your offers and have decided on which university to go to.

You’d also need to know how much you need to borrow as part of your application process. 

Be sure to read through the terms of your student loan before taking it on. Source: Louai Beshara/AFP

Things to look out for

Applying for your first loan can be confusing, what with all the technical jargon and financial knowledge you’ll be required to have. However, here are some general rules to get the ball rolling: 

Apply for a government loan before seeking out a private one

Most students tend to go for government loans over private ones. This is because there is usually a little more flexibility on offer from the government, especially when it comes to your repayment terms. 

Private banks, on the other hand, will have the chance to set their own terms. This means that you’ll be subject to a certain level of interest or may not be able to pay everything off at once.

Make sure you check the proper terms of your agreement before signing on for a private student loan. 

Borrow only what you need

It might seem tempting to borrow more than is necessary. After all, you’ll have other expenses to take care of, like your groceries and living stipends.

However, borrowing more means that you’ll have more to pay back in the future — which can make building your wealth difficult in the long run. 

You’ll have to pay interest 

Once you’re done with school, you might think that you’d need to start paying back the amount you borrowed.

This is true, of course, but you might not have realised that there would be an added interest fee. All in all, you’ll be paying back a lot more than what you borrowed. 

You can’t use your loan money for non-educational expenses

This means that all other expenses outside of university — like your entertainment, groceries, restaurants and more — will not be counted.

Be sure to abide by your loan terms, or you might find that your loan is withdrawn — or that your lender charges you an extra fee.