As beneficial student loans are, they are a form of debt and all knowledge about them must be known to the borrower to prevent any unprecedented events from happening. There are definitely a lot of myths surrounding student loans and we are here to debunk some of the major ones.
I am a straight A student so I definitely won’t need a loan
Although being a straight A student helps you in a lot of ways and is very rewarding academically, it can only help you so much. It will definitely get you admission into a great college and maybe into your dream university but the harsh reality is that the cost of going to a reputed university is extremely high nowadays, and the price keeps increasing. A loan might be beneficial for you to fund those dreams and in some cases, it might even be a necessity.
I have good grades so I will get a loan waiver
Again, having good grades isn’t an assurance of not needing a loan, or getting a waiver on one. Loans are for all students, irrespective of the grades. Even if you are an average student you will have to pay the full amount plus the interest in installments at the determined intervals. There are no exceptions.
Loans are different from scholarships and grants
Loans are not the same as scholarship and grants. They are not a reward for your academic performance and have to be returned. Thus, thinking of student loans as a one off thing is not a wise decision. One must be aware of this difference while taking a loan.
Repayment has to be done during the course
Although it is possible to pay the debt off during the course of the loan, it is not necessary. You only need to pay the loan off after the completion of the course. There is a moratorium period of 6-12 months after which the repayment period starts.
You always need collateral while taking the loan
It is true only for studies abroad. If you are taking a loan for a university in the country, you do not need to necessarily provide a collateral for a loan. A collateral is any of the three assets you have to pledge to the bank, like cars or houses. It is a common misconception that collaterals are a must. This is entirely false.
Studying abroad does not cover living expenses
It is a common misconception that the student loan only covers the tuition fees. However, this is not true at all. The banks cover everything that comes under the educational course right from the studying material to boarding and some banks even pay for the laptop to be used during the course.
I should consolidate my loans into one
Although it is rare to see it these days, consolidation of loans is not very much advisable and the borrower must rethink and be sure to know what they are getting into before consolidating loans. Consolidating the loans may even lead to higher interest rates on the loan so caution is advised.
I don’t need to think about paying off my loan during the course
This is not entirely true. Interest on your loan keeps adding up irrespective of the tenure. So many people take up jobs or part time employment during the duration of this course and this means that they have some capital to pay off the interest on the loan so that they have to pay less after the moratorium period. It is advisable and encouraged to pay off the piling interest while the course is going on as many people do it.