There are plenty of roads to financial stability in the Philippines but getting a college education from a top university is still one of the most preferred options. Plenty of companies rarely hire employees without college degrees, and such an education opens plenty of opportunities.
However, the yearly rise of tuition fees makes college a costly investment that not all households can afford. Families who are significantly affected by the pandemic financially will especially feel the burden caused by the rising fees of quality education.
Fortunately, these can be resolved by getting a loan that will pay for your education in the meantime. There are numerous student loan benefits that make an investment worth it, but it’s also your due diligence to learn everything about such a financial scheme.
This piece will dissect what student loans are, why they are a viable path to acquiring a college education, and the pros and cons of such an approach. This hopefully clears the not-so-ideal reputation student loans usually get from mainstream media.
What are Student Loans?
Student loans are defined as a type of lending system specifically designed for students to pursue their education. Collegiate and post-graduate students can take loans from public and private lending institutions. These loans can be repaid before or after the student finishes their collegiate education.
Those familiar with the American system will find that its Philippine counterpart operates the same in all but one aspect: different creditors have different repayment terms. Depending on the type of loan you’ll acquire, you’ll be asked to pay anywhere from one to ten years. Some even offer mobile payment method for convenience.
While the student loan system has been around for a while, it’s never been a popular option among Filipino households for one reason or another. Scholarships and financial aid are the preferred avenues, but the ever-increasing competition for such spots increases the appeal of student loans towards those eager to get a college education.
Why Should You Get a Student Loan?
Getting a loan to pay for your education is a huge financial investment for someone that doesn’t have a job yet. However, there are multiple reasons why a student loan isn’t the most terrible idea to take for your college education.
- It helps you manage your finances. Financial literacy is one of the most important lessons you can learn in life, and student loans can be instrumental in helping you learn the ropes. It teaches you to be accountable for your expenses.
- Worry less about your fees. Since student loans usually cover your entire college education, you wouldn’t have to worry about paying your tuition every semester. These loans let you focus on your academics.
- Juggle your living expenses as a student with ease. Since you don’t have the burden of your tuition fee on your wallet, you don’t have to skimp on your living expenses as a student
- Loans nowadays come with great rates. It’s easy to think that student loans take advantage of their customers, but that’s far from the truth. There are plenty of creditors that provide fair rates to students.
Pros and Cons of Student Loans
Of course, an agreement with such an enticing benefit doesn’t come without its own share of danger. Understanding the perks and risks of taking on a student loan will help you make an informed decision.
- It allows you to get to college. Student loans help you take a step closer to long-term financial security by providing you with an opportunity to study for a degree.
- You can always earn more after graduating. The earning power you can get with a college diploma can help you pay off your loans over time.
- Getting loans helps you increase your credit score. While there are still no centralized credit scores in the Philippines, being able to pay off a loan will improve your chances of getting a more reasonable loan from creditors.
- Student loans can offer higher borrowing limits. Since you’re getting a loan to have your collegiate education sorted, most creditors are willing to give you a higher amount.
- Student loans are expensive. There’s no way to get around it; you will have to pay a considerable amount if you decide to study at one of the country’s premier colleges.
- A cosigner may be needed for your loan. You’ll likely be required to have an adult vouch for your loan. If you’re unable to pay your loans, the cosigner’s credit score will be compromised.
- Interest rates may vary among creditors. Some creditors can ask for as high an interest rate as they want, making repayment challenging.
- Failure to pay your loans has huge consequences. Being unable to pay your loan will only get you deeper into debt. You’ll also likely get rejected when you apply for big loans if you don’t settle your student loans.
Secure Your Future with Student Loans
A college education is a great way to secure the future, so taking steps towards achieving it is worthwhile. If you want to finish your schooling without compromising your household’s budget, student loans are a great way to go; but don’t forget to consider their advantages and disadvantages.