Student loans are losing popularity
Demand for student loans has been declining recently, as students increasingly rely on family financial support.
Young people studying in universities primarily rely on financial support from their families, according to a student survey conducted by Carol. So, 74% of respondents said that it is the family that financially supports students during their studies, but self-earned income is also of great importance since 59% of respondents earn money while working in parallel with their studies.
Student years are a beautiful and at the same time difficult time
The tendency to rely on the family has especially increased over the past two years. Perhaps this is due not only to economic growth and available free funds of parents but also to the fact that students are aware that working simultaneously with study has a negative impact on the quality of education. At the same time, only every tenth young person during the training period can count on the accumulation of education created by parents earlier.
“For most people, the student years are one of the most fascinating and at the same time difficult periods of life. Students try to combine study with full-time work, but the quality of education suffers from this. While you work to independently pay all bills, debts are formed at the institute, and there is usually not enough time to fully learn the training material. More than half of 60% of Latvian students pay for their education.
Therefore, you should not rely on the fact that your child will grow up as a genius, he will certainly go to a budget place and will receive a good scholarship. Instead, it is better to take care of creating savings for his future studies in advance. And even if your child turns out to be a genius, the accumulated money will help him live during his studies or come in handy when buying his first home.
Only enough money for basic needs
As the survey shows, most students spend no more than 300 dollars on food. So, for 39% of the students surveyed, the monthly budget does not exceed 200 dollars, a slightly larger part is satisfied with the amount of 200 to 300 dollars per month. However, when asked about how much money a student needs for daily expenses, the majority of respondents answered that the amount should be at least 300 dollars per month.
To date, the largest expense items for students are housing, food, as well as tuition fees and travel expenses. It is noteworthy that, according to students, in comparison with the situation two years ago, such items of expenditure as housing, food, and transportation increased significantly.
Many students note that they regularly feel a lack of money even to cover basic needs or to cover basic needs – that’s all they can afford. Only 5% of the young people surveyed feel completely free financially with the number of funds at their disposal. Almost the third part, after satisfying basic needs, has a little money left for other things, and a quarter of respondents said that they should carefully plan their spending so that the money remains for other things, and not just to cover basic needs.
Student loans are falling
Kaspars Kopstals notes that a few years ago student loans and student loans were very popular among students, as they allowed them not to work and live independently of their parents. The first allows the student to pay the tuition after graduation, and the second – every month to receive a certain amount for everyday expenses. However, since 2004, the popularity of a student loan has fallen three times, and the popularity of a student loan has fallen by a factor of ten.
So, last year, only 1,517 young people applied for a student-guaranteed loan, and only a couple of hundred people received student loans. Undoubtedly, in this situation, the demographic decline is to a large extent to blame. However, given the inconstancy of young people and their frequent changes of opinion regarding their future profession, a student loan is not always the best choice. In addition, banks simply refuse credit to many applicants. One of the reasons is that in addition to the state, a potential student needs another creditworthy guarantor, and for some programs, the tuition fee is so high that lenders simply refuse to cover it completely. This leads to the fact that some, because of the high tuition fees, abandon the dream of higher education, while others choose a specialty, guided solely by the opportunity to get a budget place, not their own interests. In addition, many during their studies are forced to survive an amount below the subsistence level.
Student years are one of the most expensive stages in raising a child
Most parents whose children are not yet studying in universities do not have a clue how much it costs to study at a university and what average expenses are facing today’s students. For example, today the tuition fee for higher education in Latvia under the bachelor’s program is on average from six to eight thousand dollars. However, the cost of training in some popular specialties, such as medicine, IT and engineering, reaches twenty thousand dollars.
This is a very large amount, especially if you have not prepared for them in advance. And in advance, in this case, means – the faster, the better. In addition, in addition to tuition, the student must pay for housing. So, for example, last year the average student loan amount was 7,000 dollars, which means that years of study at the university are one of the most expensive stages in the lives of students’ parents. By creating savings in a timely manner, parents can facilitate this period for themselves and for their children.
The solution is saving for the future of the child
Experts believe that it is necessary to create savings for the future right from the birth of the child, making monthly small amounts that practically do not affect the quality of life of the family. The sooner you start saving, the faster you can achieve your desired goal. For example, in order to save 10,000 dollars by the age of the majority of a child, which would help him pay for his studies in the future, from the moment a child is born, it is enough to pay 35 dollars a month. In turn, if you decide to start later, say, from the moment a child reaches the age of eight, then to accumulate a similar amount, you will need already 75 dollars per month.
In addition, by creating savings for the future of a child in a bank, you can receive a 20% income tax refund from the state every year. At the end of the contract, your child will, in any case, receive a guaranteed amount, regardless of the situation in the financial markets, in addition, when creating such an accumulation, the life of one of the parents is insured. Any accumulation created by parents will become an important point of support for the child at crucial moments in life and will allow him to choose the path of life that he really dreams of.