Remortgaging and personal loans better than student loans?

There could be better ways of financing students, one university believes.

The University of Surrey, based in Guildford, has been holding discussions with banks over student finance, and questions whether the student loans advertised by the government are the most financially viable option.

A more affordable method, it suggests, could be achieved by parents and families undertaking private lending schemes, such as remortgaging homes or taking out personal loans. This could make the cost of courses more affordable in some cases.

This is a model widely used at the university. Roughly one third of Surrey's home undergraduates do not take out a student loan. Instead, families use savings or remortgages to help their children avoid large debts.

Proposals to charge graduates extra fees for repaying loans early through lump sums or larger monthly payments have come under heavy criticism. Low-earners, it has been shown, are amongst those wishing to make earlier payments, making the charges regressive and akin to a tax on debt aversion.

Meanwhile, students have been warned to choose bank accounts carefully when it comes to approaching student finance, with the overdraft facilities of some institutions not always helpful to students. Credit cards could be used to fund this period, as long as they are carefully managed to avoid future credit history problems.

Reports last week based on research from Nationwide showed that more students feel able to manage their finances thanks to the accessibility of internet banking. There are also more facilities available to quickly and easily compare the options and rates available to ensure the best deals.

Are you a student looking for a great deal on a credit card or bank account? Are you part of a family looking to find a remortgage or personal loan deal to support your children at university? Which4U can help you today.

By Nate Sawyer