Tertiary studies are expensive, there’s no way around it. Luckily though, you have options to finance it – student loans in South Africa are a realistic option, and they are readily available.
How do student loans work?
A student and a parent (with an income) apply for a loan to the student, where the parent is required to pay the interest portion of the loan on a month-to-month basis while the student is studying. The capital amount sits in the student’s name, and the student is required to repay the loan through monthly installments upon graduating.
Are student loans a good idea?
It’s difficult to say whether funding your studies through a student loan is a good or bad idea because it largely depends on the circumstances.
A key litmus test is to ask the following question: Will not taking the loan prevent me from studying? If that is the case, take the loan and study. If you are able to study without taking a loan, it is a good idea to try to avoid taking one.
It is best to start life off without debt, but if you can get a leg up by doing so (ie: you gain a tertiary education), then it probably is a good idea. Just make sure you consider everything below.
Things to consider
- Interest on student loans is not zero-rated! There is a common misconception that student loans bear no interest, or very little. The complete opposite is true – there is a huge amount of interest on student loans, comparable to any other household debt.
- If you study away from home, your bill over a 4-year degree is likely to come to around R400,000. Carefully consider all of your university options. You may be itching to move out and be independent, but the price of the repayments may not be worth it. They calculate how much you need to repay after graduation based on your salary. If you study while living at home, that’s closer to R200,000 to repay. It’ll take half the amount of time to repay a loan if you stay at home. Carefully consider this when getting a loan.
- The loan issuer (a bank, usually) ordinarily allows the student 3-6 months after graduating before they are required to start making repayments, and this term can sometimes be extended if you bring flowers for your banker. The idea with this is to give the student a fair opportunity to find a job after graduating. If, however, the free pass term expires, the parent (or whoever else stood surety for the loan) will be required to cover the repayments.
- The money from the student loans gets deposited straight into your bank account, and you can use it as you please. Make sure that this money goes towards your studies! Students often pay their tuition fees upfront with student loan money, and when they see they have R15,000 left over, they spend it at the local bar and get concert tickets… Don’t do that!
What you need to apply for a student loan
When applying for a student loan you’ll need:
- Yours and your parent’s green, bar-coded ID book (or ID card)
- Your parent’s proof of income (latest payslip)
- Proof of address of your parent
- Proof of enrolment at a qualified tertiary institution
When you go to the bank, you’ll simply hand over all the documentation, fill in some forms (make sure you know the full names and level of your degree), and you’ll have to give them a number as to how much money you need. The amount they give you will, of course, be dependent on your parent’s credit history and income bracket. A piece of advice here is when they ask you for estimates of your expenses, just say very, very low numbers – the algorithms won’t pick up on the fact that it’s impossible for a family of four to survive on R200 of food a month.
Study Loan requirements in South Africa
Every institution will have a different set of requirements for your study loan application, however, there are a number of requirements that will apply to every institution. Those requirements are the following:
- You must be over the age of 18
- The principal debtor (typically a parent or guardian who signs surety on the loan for you) must earn a certain amount per month – this naturally does not apply to applications to NSFAS.
- You must be registered as a student with a tertiary institution in South Africa
Best South African student loan providers
The biggest and best student loan providers include First National Bank, Standard Bank, Nedbank, Absa Bank, Fundi and the government’s National Student Financial Aid Scheme (NSFAS). We suggest taking a look at Fundi and FNB, as they both are really jacked up with their technology which makes things much easier. NSFAS is the biggest loan issuer in SA, and they’ll help you through every step of the process, which is helpful. The government has created this scheme to help students who come from homes with little household income. The South African government has stepped up the scheme by introducing fee-free education. If you are struggling to finance your degree and worried about having too much debt once you complete your studies, NSFAS is potentially the option you should look into.
Choose the correct student loan issuer
If you decide to apply for a student loan you need to consider which issuer is best for you. When browsing the different loan issuers, you need to try to think ahead! To help with that we have collected information from each loan issuer in South Africa.
Here’s a breakdown of what each of the student loan providers entails:
Fundi Student Loans
Fundi has the following student loan options:
- Study loans (school and tuition fees, registration fees, exam and outstanding fees)
- Study tools (textbooks, technology, study equipment)
- Accommodation (covered during studies)
- Fixed monthly repayments
- You need four documents to apply and will receive a response within 48-72 hours.
- No deposits
- The study loan is paid directly to the institution
- No limits
FYI: Interest rates and repayments will vary according to the institution and the applicant’s profile.
Check out more information on Fundi’s website or phone 0860 55 55 44
First National Bank Student Loans
What do their student loans cover?
- Tuition fees
- Campus Accommodation
- Personalized interest rate
- Access to loans from R4,000 to R80,000*
- While you study students only pay interest on your loan and can pay the rest after the student has graduated.
FYI: A new application is required each year you start studying.
For more information check out FNB’s website or phone 0861 40 40 40.
National Student Financial Aid Scheme (NSFAS)
NSFAS is a helpful loan issuer in South Africa. They specialise in helping individuals with low household income to access tertiary education. In South Africa, this is a necessary financial scheme. If you are thinking of applying for funding through NSFAS, they will provide you with help through every step of the process. They are also willing to work with you if you do not have a parent that has sufficient income to stand surety for your loan.
For more information go to NSFAS’ website or contact them via phone and email below:
Tel No: 0860 067 327
Standard Bank Student Loans
If you are a full-time student, you will also get the Standard Bank transaction account that best suits your needs when your Student Loan is approved.
What do their student loans cover?
- Tuition fees
- Accommodation for students not living at home
- Tuition and accommodation will be paid directly to the institution and place of residence whilst funds for books will be transferred to the transactional account.
- Student Loans are granted for a specific year of study and you will have to reapply for each year of registration.
- There is a maximum amount granted for each year of study.
- A once-off initiation fee and monthly service fee will be charged on your student loan.
Check out Standard Bank’s website for more information or phone 0860 123 000
Absa Student Loans
What do their student loans cover?
- SETA and SAQA courses
- Accommodation and equipment
- Earn a monthly income of a minimum of R3000 per month
- Approved based on their affordability and risk
- Pay the prime interest rate on their study loans
- Customers are offered a 15% discount on study equipment when they apply for a study loan
- The study loan forms part of the Student Package, which includes a student credit card and a cheque account
For more details go to ABSA’s website or phone 0860 100 372
Apply for a student loan
Once you have considered all of the options available to you, and you have made up your mind. If you still want to apply for a student loan, Fundi can help. We can provide you with all the details you need and go above and beyond to provide funding for all of your studying needs.