Education on credit. Is it worth it to borrow to study?

By | December 31, 2019

Extramural or evening studies in Poland amount to at least several thousand dollars per semester. The most prestigious programs can cost up to USD 40-50 thousand per year. What to do if there is a need to study and the funds are lacking?

You don’t have to convince anyone that it’s worth studying. A good education is not only a chance for a more interesting job and higher earnings but also satisfaction and personal development, which follows.

According to the data of the National Salary Survey for 2015, people with a master’s degree earn an average of 3,000 USD more than those after elementary or junior high school, while those who have incomplete higher or higher vocational education by 1.5 thous. USD more.

Studies on credit

Studies on credit

If you are not able to spend a few or several thousand dollars for studies at once, do not worry and do not give up. There are ways to do it. Universities offer various forms of payment: one-time payment of tuition fees, spreading them into installments, and even the possibility of financing education with a loan.

Studies are an investment in yourself, and a well-chosen field of study and a well-thought-out path of professional development are a chance for its return.

The possibility of spreading tuition into several installments usually increases the total cost of studies, though not always. For example, by deciding to study at the College of Management in Gdańsk, for example, we have the option of paying tuition fees in up to five installments, of which it costs us USD 50 once, and the installments add up to the one-time payment for studies.

In many schools, however, it is different – the distribution of payments results in a significant increase in tuition fees. Then we have another option – cash loan.

A loan to finance your studies is a simple cash loan

A loan to finance your studies is a simple cash loan

Any bank will gladly grant it to us if you have creditworthiness. It is not uncommon for a bank in which we have an account for years or a bank that has just been promoted for cash loans for new customers, to be more advantageous. It is worth choosing the best solution.

How to do it? You should carefully check the cost of the loan offered by the university and compare it with the cost of paying the tuition in installments and loan offers from other banks. You can do it yourself or ask for help from a financial advisor who will prepare simulations of loan offers from several banks.

The second option is to compare the so-called representative examples of loans. Since 2011, when advertising loans and credits, banks are required to provide a simple calculation of the cost of the loan offered. It should show:

  • APRC, i.e. the actual annual interest rate,
  • total loan amount (without costs),
  • the total amount to be paid (i.e. the loan amount plus all costs),
  • loan interest rate,
  • the total cost of the loan, including all its elements (such as commission, interest, handling and preparation fees – if any),
  • number, type and amount of installments,
  • duration of the contract.

When analyzing representative examples, particular attention should be paid to the APRC, the percentage of commission and any handling fees. APRC is the actual level of interest on the loan, and the level of additional fees is important because it is thanks to them that banks often compensate for the costs of promotion in the style of “no margin” or low interest.

In the analysis, we must take into account the percentages, because it is unlikely that examples representative of loans from several banks would be calculated for the same amount and for the same loan period (which would allow us to easily compare the total amounts to be paid). To facilitate the task, however, you can contact bank consultants to prepare such calculations for the loan amount you are interested in.

The option of financing education is worth considering

The option of financing education is worth considering

For people under 25 years of age who also work and want to study in absentia. Preferential loans supported by the state are available to them. student loans. These loans are completely interest-free, paid out in monthly installments of USD 600 or USD 800, depending on which option the student chooses.

This loan can be taken for the entire period of study, for a maximum of 6 years. The obligation to repay appears only two years after leaving school and then the loan begins to bear interest. However, the interest rate is minimal – in 2016 it is 1.75%.

The number of repayment installments can be twice as large as the number of loan installments paid, so if we have been getting a loan for 5 years with 10 installments a year, we can pay it back in 100 installments. Student loans can be used by students of both public and private universities.

Such a loan is also a way to finance tuition installments. Although, thanks to the preferential terms of its granting and repayment, it can pay off, even putting this money on a savings account or deposit, e.g. to build a financial pillow. We wrote about the fact that it is worth building here.

Science is an investment in yourself, it is worth taking care of your own development. If credit is the only option to get or deepen your education, it is worth looking at the options and considering them.

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