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Banking

Borrowing money for study: what you need to know

8 January 2019

Heading into study – whether it’s for the first time or the first time in a while – is an exciting place to be in. You’re about to embark on a journey that will likely see you meeting like-minded people, learning a lot, and possibly stressing over one or two course assessments.

Before you commit to a study program, you’ll need to consider how to budget and finance for the duration of your course. This can be difficult because there are often a number of obstacles in the way. Things like living costs, course fees, textbooks and other study materials, and everyday things like utilities, bills and rent all need to be budgeted for.

Starting to sound a little bit overwhelming? Don’t worry – there are a few options you can explore to ensure you’re not eating 2 minute noodles every night, including:

1. Check if your course is covered by student loans

If your course fees are incredibly expensive, or you’re just overwhelmed with nerves and excitement after receiving confirmation of your enrolment, don’t panic. There may be government student loans available to cover a portion of your study. This is usually attainable to students who meet particular requirements in Australia, giving them an allowance or student loan. For example, there are higher education loans or trade loans available for eligible Australian apprentices.

What’s the kick? You’ll need to repay any loaned amount through the tax system when your income reaches a certain amount (called the compulsory repayment threshold), or you can choose to pay off your debt sooner. Before you explore this option, it’s worth finding out if your study provider’s course is eligible for government student loans.

2. Ask payroll for an advance

What’s it like to borrow money from your future self? Well, a payroll advance can give you access to your wage before it’s owed. Because it’s not tied up in a web of interest, it can be a good way to ‘borrow’ money for a portion of your study payment, like for a short course that needs to be paid up-front. You need to know that there might be tax implications, so it’s worth checking with your employer and exploring it further.

There are also important questions you should ask yourself and your employer when it comes to payroll advances. For example, does your employer have a payroll advance policy? Remember to explain why you need the cash advance. It’s also worth considering the possibility that your employer might pay a contribution towards your study too. Before you ask for a payroll advance, it’s important to think wisely about your long-term financials. This helps you to make good financial decisions and be prepared when you have the conversation with your employer.

3. Approaching friends or family for a loan

Borrowing money from a relative or friend can be an effective way to pay off your study. Usually, the pros outweigh the cons – it could be from someone you trust, it doesn’t require any paperwork, and you might even be able to ‘negotiate’ an interest-free loan with promises of baked goods and dog walking services.

But there are some important things you should consider first. It’s important to really consider who you approach to ask – is it someone you trust? Is it someone who’s financially secure? It all boils down to being honest with your finances, accepting responsibility, and having a plan for paying them back.

How to talk to your friends and family about money

4. Using a personal loan for study

You may be able to take out a personal loan to fund your studies, be it to cover a portion or the entire thing. It can give yourself the jump start you need, helping you pay off things like:

  • Vocational education
  • Courses not covered by student government loans, for example private school or college
  • Study-related materials

Learn more about personal loans

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Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product