Education is among the essential investments into one’s future. Nevertheless, the largest part of students lacks the funds to pursue further education, as they need to cover housing costs, food, study materials, etc.
While Lånekassen offers advantageous loans to students, not everyone meets their eligibility criteria. Individuals who aren’t considered eligible have no other option but to apply for unsecured credit. This alternative isn’t exactly beneficial owing to the hefty interest. Nevertheless, many young people eager to go to college must rely on banks to pursue their dreams.
Here is everything you need to know about the financial opportunities for students in Norway.
How do student loans work?
Student loans are borrowed either from the government or private lenders for the purpose of paying for college. These have to be paid back, unlike grants and scholarships. The funds provided by moneylenders are predominantly used for covering accommodation, tuition, books, and many other fees.
Students in need of financing to continue their education have to sign a promissory note, referring to a document where they agree to repay the sum borrowed plus interest. The promissory note also includes all the conditions and terms of the loan. See this URL, https://www.britannica.com/topic/promissory-note, for a better explanation of a promissory note.
The majority of students in Norway are provided with financial help from Lånekassen, which is a public administrative body under the Norwegian Ministry of Education and Research. The aim of Lånekassen is to make education accessible to all citizens of Norway, despite their background. The student loans provided by Lånekassen are not exactly the same as those offered by banks.
The unique aspect of Lånekassen’s offers is the opportunity for students to convert part of the loan into a grant, which is as many as forty percent. Conversion into a grant is feasible to students meeting their requirements, such as not living with parents and having income beyond the provided threshold.
In addition, students can choose to apply for a reduced loan, referring to the part that will be eventually converted into a grant. By eventually meeting the conditions for conversion, your debt will no longer exist. Lånekassen has schemes for different life circumstances, such as being over thirty years old, having children, or having impaired abilities.
Another crucial aspect about student loans provided by Lånekassen is their interest-free character in the course of study. Individuals aren’t forced to pay the funds off while studying. The repayment term commences after finishing your education. There’s a payment-free period of approximately seven months following college. The added interest is in effect from the day of studies completed to the day when the sum has been entirely repaid.
Moreover, student loans are classified as personal, meaning no collateral is needed. The debt amount you owe after graduation is defined by considering several factors, including the length of your studies, whether the studies took place in Norway or abroad, etc. Those who have taken out basic credit, which covers 40% of the sum into a grant, can expect to pay a debt of about 240,000 kroner. The usual repayment term is twenty years.
What happens if you don’t get one?
Individuals for whom Lånekassen is not an option can get financed through traditional bank loans, which are unsecured. Using this alternative to pay for tuition and other education fees is among the priciest options. The main difference lies in the interest, as it’s much higher. Students should check interest rate conditions at different banks.
If unsecured loans are your only hope for continuing your studies, try to earn some income while studying to shorten the repayment term. You are also advised to use any inheritance, holiday pay, and bonuses for quicker repayment. It’s important not to borrow more money than you actually need. Consider the possibility of getting a scholarship, so you would borrow less money.
Many young people need unsecured credit while waiting for a student loan to cover textbooks, deposits, a new laptop, and other things you need to get started. If the waiting period is short enough, you won’t waste too much money on interest. For instance, if you borrow NOK 10,000 and pay it back in a week, you’ll pay interest only for seven days.
How much money to borrow?
Many students face the dilemma of determining the right capital. Individuals taking classes at public universities will need less capital, as the studies are almost free. In contrast, private colleges cost much more and require significant capital. Banks offer an array of credit amounts, ranging from several thousand kroner to half a million kroner.
Relevant bank choices
If your borrowing requirement is large, such as several thousand kroner, you’re advised to consider banks like yA Bank, Bank Norwegian, OPP Finans, Instabank, and MonoBank. These lenders have loans of all sizes, starting from NOK 5,000. Do not set your expectations too high, as large sums are only offered to applicants with a reasonable income.
Students who need lower money sums up to NOK 100,000 should borrow from banks like L’EASY, Thorn, and KlikkLån. When Lånekassen isn’t an option, unsecured Forbrukslån provides the finances needed by students. Since the services of brokers are free of charge, why not collaborate with one to send your application to various banks. These professionals only cooperate with lenders who comply with regulations and laws.
The response time of banks to applications is indeed fast, from several minutes to a day. They usually send their responses via email and rarely take more than a day to send an answer back. Individuals are provided with thirty days to accept the non-binding offer. If you don’t make up your mind during this period, the offer will no longer be valid. Borrowers who decide to accept should sign the agreement sent by the bank, usually via BankID.
Final thoughts
If you don’t meet the criteria of Lånekassen, unsecured credit is your best chance to go to college.
Don’t ever give up on your dreams!
