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Student Line of Credit

Many college and vocational school students find themselves faced with expenses that may not be covered by student loans and grants. Examples of expenses that may not be covered by student loans include textbooks, computers, software, housing, transportation and meals.

A student line of credit is a means of finance designed to help students cover the cost of these expenses. Unlike a student loan, a line of credit is an amount of credit that the student can use for whatever purpose they wish.

The student will have to pay interest on a student line of credit but the student can determine how much of the line of credit they use. The amount the student pays back will be determined by adding the credit balance and the interest charged.

Advantages to Using a Mortgage Broker

One advantage to a student line of credit is that it is an open ended arrangement. This means that the credit becomes available again once the student pays it off.

A student could for example pay off all or part of the line of credit by working at a part time or summer job and use the line of credit to cover expenses during the school year. This could help a student concentrate on their studies and avoid the necessity of getting a part time job.

Another advantage to a student line of credit is that it can be used to cover emergency expenses unrelated to education such as medical bills, insurance, food, transportation and housing. Using a student line of credit can help a student avoid spending grant and student loan money to pay off expenses.

Sources of Student Lines of Credit

The first place that a student should search for student lines of credit is their school’s financial aid office. Many colleges, universities and vocational schools make lines of credit available to students. Most institutions of higher learning have arrangements with lenders to make lines of credit available to qualified students.

Many banks will make lines of credit available to qualified students. Students who are studying for degrees in certain fields will be more likely to get lines of credit than others. Many online lenders have special lines of credit for students.

Credit unions and banks associated with colleges or universities will often make special lines of credit available to students. Students at the college associated with the financial institution may get a better deal on lines of credit from these lenders.

Disadvantages to a Student Line of Credit

A student will have to pay off a student line of credit sooner or later. Many students graduate school with a large amount of debt because of lines of credit. Quite a few college graduates find their incomes limited because they have to spend most of their money to pay off college loans and lines of credit.

Students can reduce the cost of lines of credit by getting the lowest interest rate possible on a line of credit. A student should always try to get a line of credit with the prime rate of interest. The prime interest rate is the interest rate that lenders give to their best customers so it is usually the owest interest rate.