A student loan is a type of loan designed to help students pay for tertiary 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. This article highlights the differences of the student loan system in several major countries. The financial risk of student loan defaults can be carried by the tertiary education institution.
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👉 Student loan in the context of Student financial aid
Student financial aid (or student financial support, or student aid) is financial support given to individuals who are furthering their education. Student financial aid can come in a number of forms, including scholarships, grants, student loans, and work study programs. Each of these methods of providing financial support to students has its advantages and drawbacks.
Many countries have some kind of financial aid program for their students. In countries that provide education to all at nominal cost, financial aid may have only a tertiary link to educational status, instead tied to the economic conditions of the family, and financial support for students is primarily indirect. In Belgium, for example, "[t]here is no system of student loans and direct support is only given in the form of means-tested grants to students from low-income families", which constitutes a very limited proportion of students.
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Student loan in the context of Employer student loan contributions
Employer student loan contributions are a type of employee benefit in the United States. With this benefit, employers pay back student loans on behalf of employees, at certain amount per month as decided by the employer. Companies are using this benefit as a way to attract and retain employees, especially millennial workers. This benefit has grown as education debt has increased. According to the Washington Post, student debt has nearly tripled since the early 1990s and averaged $35,000 in 2015.
Only about 3% of companies currently offer employer student loan contributions, according to a survey by the Society for Human Resources Management from June 2015. Prominent companies that have announced this benefit include Fidelity Investments, PricewaterhouseCoopers, Natixis Global Asset Management, Kronos, NVIDIA and law firm Orrick, Herrington & Sutcliffe.
Student loan in the context of Student debt
Student debt refers to the debt incurred by an individual to pay for education-related expenses. This debt is most commonly assumed to pay for tertiary education, such as university.
The amount loaned or the loan agreement is often referred to as a student loan. In many countries, student loans work differently compared to mortgages with differing laws governing renegotiation and bankruptcy. As with most other types of debt, student debt may be considered defaulted after a given period of no response to requests by the school or the lender for information, payment, or negotiation. Afterward, the debt is turned over to a student loan guarantor or a collection agency.