You will find student loans not only in the USA , but also in Australia, Great Britain and Korea. The idea of these loans was born shortly after the Second World War and its aim was to support military returnees in college. Over time, it began to serve other less wealthy students.
Its main advantage is low interest , which is provided by state subsidies
The state itself is also one of the creditors in the USA. Others are:
- non-banking institutions,
- charitable and endowment organizations .
Loans from the state are cheaper than from commercial providers, but the government still profits from them. In recent decades, they have become a particularly profitable business .
Will Student Loans Cause Next Financial Crisis?
According to Jaroslav Brychta, chief economist at X-Trade Brokers , yes: “This is a serious problem that is slowly beginning to get out of control.”
Student loans are associated with a number of problems – for example, as the only one is not forgivable even in the case of personal bankruptcy . Also, indebted students cannot transfer to another lender with better terms. Conversely, the lender can easily pass on their loan to someone else.
Student loans usually do not decrease, but increase (you can watch it in real time on debt hours). Today, the total debt exceeds $ 1 trillion , which guarantees him second place after mortgages. And certainly we do not have to remind 2008, when the financial bubble in the US concerning housing loans burst.
Student loan is not an ideal start to life
Students should repay their debt 6 to 12 months after graduation , regardless of whether they have completed it successfully. So if they can’t find a job right away, they can get into a debt trap .
Moreover, the student loan has been repaid for many years and it is therefore almost unthinkable for them to take a mortgage or buy a child. In addition, one loan for the entire period of study is usually not enough, and so it is often added to credit card debt .
It is therefore no wonder that not only in the US people are calling for forgiveness of student loans or at least their overall reform.
What is the situation in the Czech Republic?
In our country, most universities are free of charge, so students only deal with money for accommodation, food and teaching aids. However, some companies have started offering student loans, but have withdrawn them due to lack of interest. Currently only about 5 companies offer financial assistance to students , and most of them are student overdrafts .
However, even students sometimes solve unexpected expenses, such as a broken laptop can make the study really unpleasant. If parents cannot help, students can use the Credit micro-loan to borrow up to CZK 1,500 without any charge .