I have two older siblings who are already in college.
My parents can’t afford to help with my rent, but the course I’m hoping to get accepted into is in Galway (I live in west Cork).
What loans are available to help me with the cost of living?
All banks in Ireland offer student loans, current accounts and credit cards. The student must be over 18 years old, an Irish resident and attending a recognised third-level college in Ireland. S
tudent loans are available to fund such items as travel, living expenses and general back to college expenses. If you hold a Bank of Ireland third-level student current account, you can borrow anything between €500 and €5,000 at an annual percentage rate (APR) of 5%.
Loans can be repaid weekly or monthly over a term of one to five years.
If you wish to compare various banks interest rates, the website ccpc.ie is very useful. Before you apply for the loan you will need to know how you are going to repay it. Can you get a part-time job? Make sure not to miss a repayment as it will affect your credit rating.
AIB offers a Student Contribution Charge Loan at a rate of 8.5% for third-level students. With this loan you can draw down up to a maximum of €3,000 each year, on an interest-only basis for up to a four-year period. The maximum drawdown limit over the four years is €12,000. Interest has to be funded at a minimum, on an annual basis, followed by capital and interest repayments.
The Credit Union also offers student current accounts and loans – but these loans may need to be guaranteed. Banks generally look for indemnities to be signed for student loans.
There are student grants available for third-level education (SUSI), but these grants need to be applied for before you start college.
Can you give me an indication of the cost of one year at college? What are the realistic costs I should budget for?
Besides college fees, which average at about €3,000 per year, depending on the college course you will need a laptop, books and stationary. You will need somewhere to stay, whether on campus or in shared accommodation, unless you can live at home. If you avail of a student grant, this will likely cover all fees and accommodation costs.
You will still require transport and the average spend on transport to college is €344 (as per Zurich’s Cost of Education Survey 2021), unless you can cycle or walk. The rent payable during the 2021 academic year averaged €5,931 and the financial support from parents averaged €1,809, (according to the same survey). A part-time job is a good idea to help out with any bills such as heating and electricity (average €30 to €50 per month) and phone costs (average cost €20 per month). Food can cost between €250 and €350 per month.
I will have to take out substantial loans to cover my cost of living and education but I am nervous – I have never been in debt before or had to worry about repayments. Do you have any tips or reassurances?
This is a common worry for young people everywhere. I will say that, before borrowing, be sure you know how you are going to repay your loans. There are ways to reduce the financial burden, such as getting a part-time job, keeping to a budget, or limiting the use of public transport by either cycling or walking.
Make use of your student card to avail of any discounts. Loans can be expensive so it is important that you shop around and get the student loan with the lowest interest rate (check out bonkers.ie). There are student assistance funds/supports and student grants available and your individual college will have details of these, which can help.
Financial and banking terms can be difficult for anyone to understand, but if you’re a student just starting out on your financial journey, difficult to understand language can put you off learning more about money and financial planning. Here are some common terms and what they mean:
When you take out a loan from any banking institution, you will have to pay an interest rate on top of that loan. This is how the bank or credit union makes a profit. You need to consider how much interest you will be paying on a loan – because if you borrow, for example, €5,000, the amount you pay back will be considerably more and may take you longer than you expect to repay. The interest rate charged on a loan represents the cost of lending and what a bank/ lender earns for lending that money to a borrower.
An indemnity provides insurance to a bank/ lender on behalf of a borrower, in the event that the borrower is unable to repay the loan. It is usually signed by a parent or guardian. Financial institutions always require proof that a loan can be repaid.
Annual percentage rate (APR)
The APR is the cost of borrowing (interest rate), plus any other expense or fees associated with the loan. It is the real cost of the loan, expressed as a yearly rate, over the term of the loan. It will always be a little higher than the interest rate, but is much more useful for comparison purposes.
A guarantor is someone who agrees to repay a loan in the event of the borrower (student) being unable or unwilling to repay. It is a legal obligation on the guarantor unlike an indemnity. In the case of student loans, a guarantee of often provided by a parent, as a form of security to the bank/lender, to ensure the student loan will be repaid. The guarantor should have a good credit history and be financially stable.
A budget is a way to keep track of your spending habits and control your finances. There are apps and online tools to help you develop a budget if you are concerned about your finances during college. This includes understanding your income (cash earned for part-time work or a loan drawdown) and your outgoing expenses (rent, food and transport).
Investing your money means taking any surplus money you might have and putting it into something you think might increase its value. If your parents are farming, they might take a portion of their annual profit to build a new shed which will enable them to house more animals and grow their business. There are many different forms of investment (your parents might argue that your college education is one!).
Credit is the ability to borrow money or access goods or services with the understanding that you will pay later. If you plan to use a credit card at college, there will be a certain limit up to which you can use the card. At the end of each month you will need to clear this amount or make the minimum payment. If used responsibility, a credit card can help students with short-term credit needs, and develop a credit rating.