The student loan is a type of loan designed to help students pay for post-secondary education and related expenses, such as tuition, books and supplies, and living expenses. This may differ from other types of loans in the fact that the interest rate may be much lower and the repayment schedule may be deferred when students are still in school. It also differs in many countries under strict laws governing re-negotiation and bankruptcy. This article highlights the differences in student loan systems in some major countries.
Video Student loan
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 debt. They are paid back from time to time through additional taxes, using a shear scale based on taxable income. As a result, loan payments are only made when former students have income to support payments. Discounts are available for early repayment. This scheme is available to citizens and holders of permanent humanitarian visas. A proven scholarship for living expenses is also available. Special help is available to native students.
There is criticism that the HECS-HELP scheme creates an incentive for people to leave the country after graduation, as those who do not file an Australian tax refund do not make any repayments.
Maps Student loan
Canada
The Province of British Columbia allows British Columbia Insurance Companies to withhold the issuance or renewal of their driver's license with repayment of student loans in arrears or child benefit payments or unpaid court fines.
French
German
New Zealand
New Zealand provides student loans and allowances for tertiary students who meet funding criteria. Full-time students can claim loans for fees and living expenses while part-time students can only claim training institute fees. While the borrower is a resident of New Zealand, no interest is charged on the loan. Loans are repaid when the borrower starts to work and has income above the minimum threshold, after this happens the employer will reduce student loan payments from salary at 12c fixed in dollar exchange rate and this is collected by New Zealand tax authorities.
India
The Government of India has launched a website, vidyalakshmi, for students seeking educational loans and five banks including SBI, IDBI Bank and Bank of India have integrated their system with the portal. Vidya Lakshmi was launched on Independence Day occasion on August 15, 2015 for the benefit of students seeking education loans. Although the Indian government offers free compulsory education for children up to 14 years old, getting quality education from private colleges is very expensive. Finally, to manage the cost of higher education, students take out loans offered by banks, microfinance organizations, and P2P solutions.
South Korea
South Korean student loans are managed by the Korea Student Aid Foundation (KOSAF) ​​established in May 2009. According to the government's philosophy that Korea's future depends on talent development and no students should stop learning for financial reasons, they help students grow into talents that serve the nation and society as members of Korea. Through the management of Korea's national scholarship program, student loan program, and talent development program, KOSAF offers tailored student assistance services and student loan programs is one of their key tasks.
United Kingdom
Student loans in the UK are primarily provided by the State-owned Student Loan Company. Interest begins to accumulate on each loan payment as soon as the student receives it, but a refund is not required until the beginning of the next tax year after the student completes (or leaves) their education.
Since 1998, payments have been collected by the HMRC through the tax system, and are calculated based on the current level of income of the borrower. If the borrower's income falls below a certain threshold (Ã £ 15,000 per year tax for 2011/2012, Ã £ 21,000 per year tax for 2012/2013), no reimbursement is required, even if the interest continues to accumulate.
Loans are canceled if the borrower dies or becomes unable to work permanently. Depending on when the loan is taken and which part of the borrower from the UK, they can also be canceled after a certain period of time usually after 30 years, or when the borrower reaches a certain age.
Student loans issued between 1990 and 1998, in the introductory phase phase of the UK government in student loans, were not subsequently collected through the tax system in subsequent years. Responsibility is (and still is) with the loan holder to prove that their income falls below the threshold calculated annually set by the government if they wish to delay their loan payments. An early student loan portfolio from the 1990s was sold, by the Department for Business, Innovation and Skills in 2013. Erudio, a financially supported company by CarVal and Arrow Global was established to process apps for suspension and to manage accounts, following its success the purchase offer of loan portfolio in 2013.
There are complaints that graduates who have repaid their loans still have Ã, Â £ 300 a month taken from their account and can not stop it.
United States
In the United States, there are two types of student loans: federally sponsored federal loans and private student loans, which extensively include state-affiliated non-profit agencies and institutional loans provided by schools. Most of the student loans are federal loans. Federal loans can be "subsidized" or "subsidized." Interest does not increase in subsidized loans while students are in school. Student loans may be offered as part of a total financial assistance package that may also include grants, scholarships, and/or work study opportunities. While interest for most business investments can be deducted from taxes, the interest of student loans is generally not deductible. Critics argue that tax losses for investment in education contribute to a shortage of inexperienced labor, inefficiency, and slower economic growth.
Prior to 2010, federal loans were also divided into direct loans (originating and funded by the federal government) and secured loans, originated and held by private lenders but guaranteed by the government. The secured loan program was abolished in 2010 because of the widespread perception that government guarantees increased the earnings of student loan companies but did not benefit students by reducing student borrowing costs.
Federal student loans are cheaper than private student loans. However, the federal student loan program still generates billions of dollars in profits for the government each year, as interest payments exceed government borrowing costs, loan losses, and administrative costs. Losses on student loans are very low, even when students fail, in part because these loans can not be released in bankruptcy unless repaying the loan will create "undue difficulties" for the student borrower and dependents. In 2005, the bankruptcy law was changed so that private education loans also could not be dismissed immediately. Proponents of this change claim that it will reduce the interest rate on student loans; critics say will increase earnings of creditors.
Earnings-Based Income
The Income Based Income Plan (IBR) is an alternative to repaying federal student loans, allowing borrowers to repay loans based on how much they make, and not based on how much money really owes. Revenue-based payments are federal programs and are not available for personal loans.
The IBR plan generally limits the repayment of loans by 10 percent of the student borrower's income. Deferred interest increases, and your outstanding balance increases. However, after several years, the balance of the loan was forgiven. This period is 10 years if the student borrowers work in the public sector (government or nonprofit) and 25 years if students work for profit. Debt forgiveness is treated as taxable income, but may be exempted as tax under certain circumstances, such as bankruptcy and bankruptcy.
Scholars have criticized the IBR plan on the ground that they create moral dangers and suffer bad selection. That is, IBR and PAYE encourage students to borrow as much as possible and as long as possible and mostly for personal (indirect) expenses (not tuition and fees), especially at the graduate level where there is no limit to borrowing (up to $ 138,500 in Staffords plus Graduate unlimited plus loans) and directs those who can get high-paying jobs to take low-wage jobs with good benefits and minimal working hours to reduce their loan payments, thereby increasing the cost of the IBR program. And, if the IBR program is optional, only the student with the highest debt relative to the wage will participate in the program. For example, because the formula to qualify, the majority of students with debts exceeding $ 100,000 would qualify even if income at or near the average wage, so they do not have an incentive to borrow responsibly. Historically, a number of IBR programs have collapsed due to this problem.
Qualification
Most students in the United States qualify for federal student loans. Students can borrow the same amount of money, at the same price, regardless of their own income or their parent's income, regardless of the future income they expect, and regardless of their credit history. Only students who have failed a federal student loan or have been convicted of a drug offense, and have not completed a rehabilitation program, are excluded.
The number of students can borrow each year depending on their education level (undergraduate or graduate), and their status as dependent or independent. Undergraduate students qualify for subsidized, no-interest loans while students are in school. Graduate students can borrow more per year. (Graduates and professional schools are expensive and less help than other types are available.)
Private lenders use different underwriting criteria, including credit ratings, income levels, parental income levels, and other financial considerations. Students borrow only from private lenders when they spend the maximum loan limit under federal loans. Some experts have advocated eliminating borrowing limits on federal loans and allowing students to borrow according to their needs (tuition plus living expenses) and thereby eliminating high-cost private loans.
Reissue
The federal student loan interest rate is stipulated by Congress and enrolled in Ã,§ 20 U.S.C. Ã,§ 1087E (b). Since interest rates are set by Congress, interest rates are political decisions. The current federal student loan program (2010) runs a multibillion-dollar "subsidized" subsidy, or profit, for the federal government. Loans for graduates and professional students are very profitable because of high interest rates and low default rates. Some experts argue that the federal student loan rate should be tailored to a particular course of study and reflect the riskiness of the various courses. They also suggest that the program should be run at a cost, or below cost, because the benefits provided by the workforce are educated to the public - lower burdens on public services, lower healthcare costs, higher wages and tax revenues, unemployment lower.
The repayments usually start from six to twelve months after a student leaves school, regardless of whether they complete the degree program or not. Usually the payment begins if the course load drops to half the time or less.
With a federal student loan the student may have several options to extend the repayment period, but although an extension of the loan term will reduce the monthly payment, it will also increase the total interest paid on the principal balance during the loan term (unpaid interest and any penalty capitalized, that is added to the balance of the loan). Extension options include extended payment periods offered by original creditors and federal loan consolidation. There are other renewal options including revenue-sensitive payment plans and delays.
Master Promissory Note is an agreement between the lender and the borrower who pledges to repay the loan. This is a binding legal contract.
Critique
In coverage through established media, many borrowers have expressed a feeling of being victimized by a student loan company. There was a comparison between these accounts and the trend of college credit cards in America during the 2000s, even though the amount owed by students on their student loans was almost always higher than the amount owed on credit cards. Many anecdotal records of the difficulties caused by excessive student debt levels were recorded by the Student Loan Justice organization established and led by consumer rights advocate and author Alan Collinge. Student loans can not be released in bankruptcy if the debtor can not show "undue difficulties". After the passage of the bankruptcy reform bill of 2005, even private student loans did not run out during bankruptcy. It provides loan-free credit risk for lenders, averaging 7 percent per year.
The increase in student loans has also been blamed for pushing up tuition. As the Cato Institute economist Neal McCluskey puts it in an April 2012 article for the U.S. World. & amp; News report: "The basic problem is simple: Give everyone $ 100 to pay for college and college will raise their price $ 100, negate the value of aid, and inflation-adjusted aid - mostly federal - is definitely up, ballooning from $ 4,602 per scholar from 1990-91 to $ 12,455 in 2010-11. "However, most peer review by economists does not support this claim.
In 2007, Andrew Cuomo, then the Attorney General of the State of New York, led an investigation into the practice of lending and anti-competitive relationships between student and university lenders. In particular, many universities are directing student borrowers to the "preferred lender" which results in borrowers issuing higher interest rates. Some of these "preferred lenders" allegedly rewarded the university's financial assistance staff with "bribes". This has led to changes in lending policies at many major universities in America. Many universities have also returned millions of dollars in return costs to affected borrowers.
The biggest lenders, Sallie Mae and Nelnet, are often criticized by borrowers. These lenders often find themselves involved in the most serious lawsuits filed in 2007. A fake lawsuit filed on behalf of the federal government by former Department of Education researcher Jon Oberg against Sallie Mae, Nelnet, and other lenders. Oberg argues that lenders are burdening the US government and diluting taxpayers millions and millions of dollars. In August 2010, Nelnet completed the lawsuit and paid $ 55 million.
The New York Times publishes an editorial in August 2011 which supports the return of bankruptcy protection to private student loans in response to the economic downturn and universally increased tuition fees in all colleges and graduate institutions.
In 2013, many economists predict a new economic crisis will emerge as a result of about $ 1 trillion in student loan debt that currently affects two-thirds of American graduate students. However, most economists and investors believe that there is no student loan bubble.
See also
- Tuition in the United States
- EdFund
- Free education
- Higher Education Bubble
- Higher Education Price Index
- Post-secondary education
- Private universities
- Student benefits
- Student debt
- Education Bureau
- Learning center
- Tuition
- Freeze tuition
References
Further reading
- Manning, Robert D. (1999). "Credit Card on Campus: Social Cost and Student Debt Consequences." Washington, D.C.: The American Consumer Federation.
- Schemo, Diana Jean, "Personal Loans Deepening Student Debt Crisis", The New York Times , June 10, 2007
- "New Default Values ​​Data for Federal Student Loans: 44% of Congenital Attend Lucky Institutions", Faiths to Charities Pew, Project on Student Debt, Berkeley, California, December 15, 2009
- Studentaid.ed.gov on Federal Loan Perkins Loan Cancellation
External links
- "UNITED NATIONS: Education Policy and Reform"
- "Big Money On Campus". US. News & amp; World Report . October 19, 2003.
- "College, Inc.", PBS documentary FRONTLINE, May 4, 2010
Source of the article : Wikipedia
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