Student Loan: A Burden To Beneficiary -By Ghazali Ibrahim

As many countries are taking a chill wind of recession due to covid 19, pandemic has put students in dire straits. But now with time, students have also found different alternatives to come out of the bog. But what about the students who are still facing trouble to accommodate finances for their study? How will they be able to meet the academic requirements? Will they be able to fund their dream?

The concept of student loan is not a novel idea in the academic world. The idea was brought into existence in order to help student who are facing difficulty in their academic studies only after discovering that most student drop out of school due to financial issue.

A student loan is designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy.

In United States, the amount students can borrow each year depends on their education level (undergraduate or graduate), and their status as dependent or independent. Undergraduates are eligible for subsidized loans, with no interest while the student is in school. Some experts specify believe that the education of workers would bring societal benefits such as reducing stress on public services, reducing medical expenses, increasing incomes, and promoting employment rates. These people propose that federal student loan rates should be adjusted with specific courses, relative to the rate of risk and societal returns from various studies.

However, the introduction of student loan has been a burden to the beneficiary than the solution it was initiated for. This is due to the idea of libertarian that connotes thus: “Academic education shouldn’t meant for all”, many people after taking the loan to complete their studies will become insolvent due to the nature of the country’s economy. Let’s take a look at the number of countries that practice student loan initiative, statistics could be seen that majority of these countries have their beneficiaries not paying the loan. As of 2013, many economists are predicting a new economic crisis will emerge as a result of an estimated $1 trillion of student loan debt currently impacting two thirds of graduating college students in America. Do you think this could be a solution to Nigeria educational system? However, most economists and investors believe that there is no student loan bubble. Examples are India,Australia,Germany,Canada etc.

Nigeria is yet to practiced this system but to foresee the success of the program will be to take a look at the advanced world and which shown that citizen will actually benefit from it but the repayment will be a burden to the beneficiary due to unemployment rate and the economic situation of the country.

Payments on student loans can be financially crippling. According to a Federal Reserve analysis, the typical monthly payment for student loan debtors is between $200 and $299. If you borrow a large sum of money to pay for school, you may end up with an even larger monthly payment.

Many student loan borrowers may have to postpone other important financial goals, such as purchasing a home, saving for retirement, or establishing an emergency fund. Others may find it difficult to fund necessary bills as a result.

While there are options for federal student loan borrowers to defer repayment and reduce monthly payments, the debt can still become a significant financial burden. Furthermore, it is extremely difficult to get rid of student loans when you are financially struggling.

While there are options for federal student loan borrowers to defer repayment and reduce monthly payments, the debt can still become a significant financial burden.

However, default to pay back can have serious repercussions. If you fall behind on your student loan payments, it can have a negative influence on your credit score, making it difficult to receive other types of credit when you need them. Furthermore, debt collectors may charge exorbitant fees, increasing the amount you owe.

To make matters worse, getting rid of student loans when you’re struggling financially, even through bankruptcy, is incredibly tough.

They may not be sufficient to cover all of your expenses. Most federal student loans have an annual borrowing restriction, and some private lenders may have one as well. You may still need to hunt for other sources depending on the cost of tuition, fees, supplies, room and board, and other expenses.

In the view of this, even if the Act passed by the National Assembly later get approval by the President, it will cause more harm than good as proposed by the initiator (National Assembly) unless if the program is going to be made free by the federal government.