Higher education is very often expensive and a large number of students have to resort to a bank loan. These loans are very often attractive, with rates lowered in order to attract the under 30s. In this article, we will tell you everything you need to know about the student loan.
What is a student loan?
The student loan is a consumer credit whose purpose is to finance studies in higher education.
This loan is unrestricted, which means that the borrower does not have to explain his expenses to the lender.
What are the types of student loans?
There are two types of student loans:
- The classic student loan;
- The state guaranteed student loan.
In the case of a state guaranteed loan, you do not need minimum resources or guarantors.
Anyone between the ages of eighteen and thirty can get a student loan if they can provide a certificate of education.
You should know that a bank can refuse you the student loan if it believes that your studies have no outlets or that you will not be able to repay the requested amount.
In addition to these two loans, most banks can offer you an honorary loan, up to a limit of $ 1,000. You can receive it in several ways:
- The back-to-school advance: $ 1,000, it allows you to cover the back-to-school costs. You must repay this amount within three months of the advance;
- The scholarship advance: you can receive up to $ 610 per month for three months. The amount must be repaid over twelve months;
- The $ 1 license: you must be between eighteen and twenty-five years old and want to pass the car or motorcycle license.
How does the student loan work?
Like a conventional loan, the bank lends you an amount that you have to repay, with interest and ancillary costs. The only difference is that the reimbursement is deferred. In fact, you begin to repay the capital once you have entered working life.
You will still have to pay:
- Interests ;
- Application fees.
As part of the state guaranteed loan, the deferred repayment is made automatically two years after the end of your studies.
The student loan has a term of two to ten years. It must be requested before twenty-eight years, thirty years in the case of the loan guaranteed by the State.
The amount borrowed depends on the banking establishments. If your guarantor is the State, you cannot claim more than $ 15,000.
What are the terms of the student loan?
The student loan must meet several conditions which are negotiable with the banker.
The interest rate
For student loans, banks apply interest rates between 0.90 and 3.50.
In addition, many banking establishments have specific offers intended for students from certain universities or schools as part of a partnership.
Likewise, there are partnerships between student mutuals and banks.
The amount awarded
The amount of a student loan varies according to:
- The level of study;
- The subscriber’s project;
- Opportunities offered by funded training.
Thus, this amount is generally between 760 and 45,000 dollars, depending on the banking establishment.
The deposit of a third party, usually a family member, may be required by the bank.
Finally, it is recommended to take out PTIA insurance (Total and Irreversible Loss of Autonomy) and death insurance as part of the student loan, even if the latter are optional.
The repayment tenure
A student loan must be repaid on the due date, whether or not the diploma is obtained. This duration varies between two and ten years.
With deferred repayment, the subscriber generally begins to repay his loan at the end of his studies, as soon as he begins to work. This deductible period can be total or partial. If it is total, the subscriber must pay only the insurance premiums. If it is partial, the subscriber must also pay the interest on the loan. In both cases, the duration of this period is between two and seven years.
At the end of the franchise period, the student must repay the loan.
How to choose your student loan?
It is possible to obtain a student loan online or at an agency, guaranteed by the state, a third party or a parent for an amount to be defined with the bank.
In order to obtain the best possible student loan, we advise you to compare the existing offers.
Please note, certain costs can cause invoices to climb:
- Application fee ;
- The interest rate ;
- Deferred reimbursement.
To help you with this, you can use this simulator to compare the best offers currently in effect and thus find the best rate for your student loan.
How to choose your student loan insurance?
With a student loan, the borrower is free to take out loan insurance or not.
In general, two formulas are proposed to you:
- DPTIA insurance (Death and Total and Irreversible Loss of Autonomy);
- DPTIA insurance supplemented by a guarantee in the event of disability.
As with the credit itself, we advise you to compare the different offers on the market.
It is quite possible to take out a loan in a bank while choosing a borrower insurance with another insurer.
Is it possible to renegotiate your student loan?
The student loan is a consumer credit. It cannot therefore be renegotiated, at least not in the strict sense of the term.
On the other hand, it is quite possible to have your student loan bought back by another bank. However, you will have to wait until the loan is being amortized or when you enter working life.
There are then two possibilities to redeem your student loan and thus realize significant savings:
- Decrease the amount of the monthly payment without modifying the duration of repayment, to lighten the monthly budget allocated to the repayment of the loan;
- Reduce the total duration of credit repayment without modifying the amount of the monthly repayment.