Credit may be a realistic option for college loans

Credit may be a realistic option for college loans

Credit may be a realistic option for college loans

If you have had a realistic look at all the expenses of the coming academic year and know you cannot cover it out of savings and/or earnings then it is time to look at credit options.

Whether you are a student looking for a loan or a parent wanting to offer financial support, it is always worth paying a visit to your credit union.

There is a good reason they are often a young adult’s first source of finance, they offer huge flexibility. The credit union will allow you pay off your loan early, make additional lump-sum repayments or increase your regular repayments, all without penalty. Rates will vary, so ask your credit union about its rates for the amount you need and then compare that to other sources. They could be competitive or you may decide you are willing to pay slightly more for the degree of flexibility and individual decisionmaking they offer.

Products for college finance with Irish retail banks vary quite a bit. KBC and Permanent TSB do not have specific loan options for students, although KBC does have a student credit card. However, while credit cards may be appealing to students, and several of the banks offer them, the interest rates mean they are not suitable to cover a long-term, predicted shortfall in college funding.

AIB offers student loans from €600, up to a maximum loan amount of €50,000, with an annual percentage rate of 8.45% (variable). Students can avail of loan terms from one to five years and must make repayments on the loan every month which are made up of the amount you borrowed plus interest.

Students can make extra payments at any time with no penalty.

At the same rate, AIB also has a specific product to cover the cost of your student contribution charge and other expenses (four annual drawdowns of €3,000, totalling €12,000).

Borrowers can choose an interest- only repayment option and make minimum monthly interest repayments for the duration of your course (maximum four years). You would then begin making full repayments on the total amount you owe over a maximum of five years. The maximum term is nine years (up to four years with flexible payment options and five years full capital and interest repayments on the balance).

Bank of Ireland also has a student loan option, with an eye-catching variable interest rate of 5.0% annual percentage rate. Students can borrow up to €10,000 at this rate. BoI offers the option to defer payments for three months, but the loan must be fully repaid after 60 months. Students can expect to be asked to provide a guarantor (normally a parent) to get loan approval.

Ulster Bank does not offer student loans but has a parental education loan suitable for those who wish to borrow for their child’s education. The loan can be taken for up to five years for loans of €2,500 to €12k, or up to seven years for loans of €12k to €40k. Previously, AIB and BoI also offered specific loan products for parents of students but these are no longer available.

One important point to mention for those who cannot afford college without borrowing is to make sure to check if you are eligible for any support from the SUSI grant system. Many look at the income threshold for the full maintenance grant plus fees or student contribution, currently €40,970 if you have up to four children, and presume they are not eligible for help.

However, this size of household is entitled to some element of finance support once the income is less than €54,240. The award at that income level is 50% of the student contribution, so €1,500 for most students. This is still a significant help for the year.

There is a sliding scale of grant and fees paid between those two figures, you can get the full details at susi.ie/undergraduate-income-threshold-and-grant-award-rates. If the student is from a larger family, there may be more assistance available, as the thresholds rise for families with between four and eight children and again for families of more than eight.

So even if you are above the threshold for the full grant, you may still be entitled to support, don’t rule it out.

Deal of the Week

If you want to kit out student accommodation on a budget, then head to Aldi on Thursday.

The retailer is starting its Student Living Event in all of its stores and previous experience suggests highly-coveted items will go fast. Its range for students includes necessities for the bedroom, living areas, study space, bathrooms, and kitchens.

Popular products are likely to include the wifi extending socket for €26.99. This easy-fit double-switch socket fits a standard 25mm wall box and has a wifi extender and USB charger for smartphones and tablets. Wifi extenders boost the signal in a building and can be a godsend if stuck in an area with a weak signal. Aldi is also selling bedlinen, multiple storage options, and a range of simple furniture and soft furnishings to brighten up a drab living space.

A sandwich maker, a slow cooker, and a George Foreman 2 Portion Grill are among a wide range of kitchen equipment to encourage home cooking.

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