Student loans in South Africa: Make your career dreams a reality
Are you set on getting a tertiary education but can't afford it? Get a student loan and make your dreams of studying further in South Africa a reality.
University education is your ticket to a well-paid job, successful career and good lifestyle; at the same time, higher education in South Africa is very expensive.
Many families do not have sufficient savings to support their children throughout the university. In this situation, a student loan is an effective solution. Find out how a student loan works.
The different types of Student loans
There are student loans that are available via the National Student Financial Aid Scheme, abbreviated as; NSFAS which is managed by the South African government.
There are also student loans from private lenders including the big four South African banks and some independent credit providers.
The National Student Financial Aid Scheme (NSFAS)
South Africa has 25 public universities. If you are a South African student enrolled in one of these institutions then you may be eligible for a loan from NSFAS
They are designed to help you cover all of your expenses including tuition fees, accommodation, food, travel expenses and spending on books and materials.
How much can I borrow from NSFAS?
Loan amounts are determined on an individual basis. The interest rate is 80% of the repo rate. This is considerably lower than the interest rates charged by banks on student and personal loans.
NSFAS Loan Application
NSFAS checks eligibility with an in-house Means Test. You also have to prove that you have a good academic record and that you will maintain this performance
NSFAS as a credit provider does not require any collateral for the loan from parents, guardians or sponsors.
Students who partner with them to fund their education are assured that the loan only needs to be paid back after graduation and once you earn an income of more than R30 000 a year.
If your annual income is lower than R59,000, the payments will be 3% of your yearly salary. If it is higher, then they will be equal to 8%.
Student loans from a Bank in South Africa
These student loans are also intended to cover all of your expenses as a student including tuition fees, accommodation expenses and expenses on textbooks, study materials and travel just like a Government-backed loan. However, they work slightly differently.
A surety has to apply on your behalf. This person can be your parent or guardian or even a sponsor who will agree to support you on your educational journey.
The surety has to have a sufficiently high income and sufficiently low debt plus a good credit score in order to secure the loan.
Student loan amounts
Loan amounts are determined for each individual case. There are various factors that will be taken into account but one of these is the financial status of the surety including how much disposable income they have. It is important to compare the interest rates and services offered by different lenders to make sure you are making an informed decision.
The credit standing of the surety will affect the rates you are offered
The repayment structure of the bank student loans is divided into two periods.
The first period encompasses the period during which the student is in school. While studying the lender only expects interest payments from the surety.
When you graduate, you will have to pay back the remainder of the interest and the principal in the form of monthly instalments.
Terms of the contract and what repayments will be expected are all set out in advance
Grace periods are granted to graduates who have to complete an internship or do voluntary work. It pays off to compare the different student loan options before you apply for a loan or a programme in a university in South Africa.