- Definition
- Usa
- United Kinkdoom
- Australia
1. Definition
A student loan is
designed to help students pay for university tuition, books, and living
expenses. It may differ from other types of loans in that the interest rate may
be substantially lower and the repayment schedule may be deferred while the
student is still in school. It also differs in many countries in the strict
laws regulating renegotiating and bankruptcy.
2. Usa
In the United States, there are
two types of student loans: federal loans sponsored
by the federal government and private student loans,which broadly
includesstate-affiliated nonprofits
and institutional loans provided by schools.The overwhelming majority of
student loans are federal loans. Federal loans can be "subsidized" or
"unsubsidized." Interest does not accrue on subsidized loans while
the students are in school. Student loans may be offered as part of a total financial aid package that may also include grants, scholarships, and/or work study
opportunities. Whereas interest for most business investments is tax
deductible, Student loan interest is generally not deductible. Critics contend
that tax disadvantages to investments in education contribute to a shortage of
educated labor, inefficiency, and slower economic growth.
Prior to 2010, federal loans were also divided into direct loans
(which are originated and funded by the federal government) and guaranteed
loans, originated and held by private lenders but guaranteed by the government.
The guaranteed lending program was eliminated in 2010 because of a widespread
perception that the government guarantees boosted student lending companies'
profits but did not benefit students by reducing student loan costs.
Federal student loans are less expensive than private student
loans. However, the federal student lending program still generates billions of
dollars in profit for the government each year, because the interest payments
exceed the government's own borrowing costs, loan losses, and administrative
costs. Losses on student loans are extremely low, even when students default,
in part because these loans cannot be discharged in bankruptcy unless repaying
the loan would create an "undue hardship" for the student borrower
and his or her dependents. In 2005, the bankruptcy laws were changed so that
private educational loans also could not be readily discharged. Supporters of
this change claimed that it would reduce student loan interest rates; critics
said it would increase the lenders' profit.
3. United Kinkdoom
Student loans in the United Kingdom are primarily provided by the
state-owned Student Loans Company.
Interest begins to accumulate on each loan payment as soon as the student
receives it, but repayment is not required until the start of the next tax year after the student completes (or
abandons) their education.
Since 1998, repayments have been collected by HMRC via
the tax system, and are calculated based on the borrower's current level of
income. If the borrower's income is below a certain threshold (£15,000 per tax year for 2011/2012, £21,000 per tax year
for 2012/2013), no repayments are required, though interest continues to
accumulate.
Loans are cancelled if the borrower dies or becomes permanently
unable to work. Depending on when the loan was taken out and which part of the
UK the borrower is from, they may also be cancelled after a certain period of
time usually after 30 years, or when the borrower reaches a certain age.
Student loans taken out between 1990 and 1998, in the
introductory phase of the UK government's phasing in of student loans, were not
subsequently collected through the tax system in following years. The onus was
(and still is) on the loan holder to prove their income falls below an annually
calculated threshold set by the government if they wish to defer payment of
their loan. A portfolio of early student loans from the 1990s was sold, by The
Department for Business, Innovation and Skills in 2013. Erudio, a company financially backed
by CarVal and Arrow Global was established to process applications for
deferment and to manage accounts, following its successful purchasing bid of
the loan portfolio in 2013.
4. Australia
Tertiary student places in Australia are
usually funded through the HECS-HELP scheme. This funding is in the form of loans that
are not normal debts. They are repaid over time via a supplementary tax, using
a sliding scale based on taxable income. As a consequence, loan repayments are
only made when the former student has income to support the repayments.
Discounts are available for early repayment. The scheme is available to
citizens and permanent humanitarian visaholders. Means-tested scholarships
for living expenses are also available. Special assistance is available
to indigenous students.
There has
been criticism that the HECS-HELP scheme creates an incentive for people to
leave the country after graduation, because those who do not file an Australian
tax return do not make any repayments
In the end i wish you found the answers that you were looking for .
Next research would be in how to get a loan or how could a student get a loan
