Apparently banks, the council of rectors and the student union are pushing for [even larger student loans](https://www.err.ee/1608683434/huvigrupid-riigi-tagatud-oppelaen-peaks-olema-suurem).
I’m puzzled why does such a thing even exist in Estonia, let alone why would they want to increase the amount and make it easier to get.
In my opinion student loans just make studying more expensive. How much something costs to provide (education, accommodation) only determines the **minimum** price you will see, and your ability to pay for it determines the actual price, moderated by competition which is low because neither of these markets are competitive.
So if you can afford to pay more for education and for a student apartment – you will. Only now you’ll have debt at an immodest 5% per annum, which will sit for years before you get a chance to start paying it back.
Banks are pushing this to get more money. Universities are pushing this to be able to raise their prices. Not sure why students are advocating for this, but overall this seems like a horrible idea to me. The US is a great example of how it all goes wrong with student loans.
I’m not a finance expert, though. What are your thoughts?
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Estonian and American student loans are very different in their design and purpose. In the US, the loans are meant to cover the amount demanded by the schools. Our higher education is free (with some caveats), so the student loan is supposed to cover living costs.
The maximum amount has stayed the same for a long time, it once equalled to average salary of half a year, now it’s less than two months’ average wage.
The loan is more of an option for making higher education easier to get by covering living costs and supplies etc. Most uni students and alumni I know have never taken a student loan or even know it exists. I just got my Master’s and didn’t need to take the loan, even though I was working minimum wage most of the way.
most cases i have seen/heard have been stupid uses of loaned money…
getting fancy clothes, putting it into stocks, fancier living conditions…
I am sure there are financially mature students that can put this kind of a loan into a good usage but same time there are many that will make their future life much harder with such decisions as student loan
Estonian student loan was max. 3000€. I don’t know what you can do with that. Buy some food, an old car or something else. I took it once (when it was 1900) and made an eye correction procedure to receive good vision 🙂
You still will be needed for two guarantors with stable incomes. To get a loan for more significant amounts, you should have your income itself. It is better to work than to take a loan from a bank.
More info in Estonian: [https://www.hm.ee/et/tegevused/korgharidus/oppelaen](https://www.hm.ee/et/tegevused/korgharidus/oppelaen). Translate with Google Chrome.
How was I managing my life during the time of studies after the 2008 crisis? Sometimes I experienced hunger. I had some smaller loans I couldn’t repay, and after I paid them, they stayed in online systems as previous debts. In that case, you will not get any loan next 5-10 years.
Which part of capitalism don’t you understand? Everyone is pushing their business and if you don’t know how to best protect your interest and choose your steps wisely, you are fucked. And frankly I’m against artificially protecting the stupid against getting their money taken from them. On the other end of the spectrum, smart students not needing the loan take it anyway and invest, because the student loan is 5% yearly interest, any index fund will likely beat it twice.
I’m having trouble understanding you, OP. I have gotten the loan and paid it back. Actually I have gotten two! I had a break between different level studies. Had it not been for the loan, I wouldn’t have gotten my ass abroad to do my degree. Never felt manipulated into getting one. Paying 50 euros a month wasn’t a big deal.
I have friends who managed their lives the whole year with that money.
What do you suggest? No loans? Loans but not paying them back because it’s *hard*? Government paying people so they wouldn’t need loans? Genuinely confused what are you trying to argue.
Studen loan is currently such bs. If you don’t have 2 people to vouch for yourself you can’t get a loan. For example I am working as well as studying and can’t get student loan. But I could take out other small loans. It is such bs system. How can you trust me with bigger interest loan which would be more difficult to pay back but not with student loan?
Just few days ago I heard news from radio that amount of new student loans has reduced to almost zero and some(?) banks are considering to stop offering student loans…