Can I get a student loan in South Africa?

The biggest student loan lender in South Africa is managed by the government. The National Student Financial Aid Scheme or NSFAS is available to students who study at the 25 public universities in SA. The amount that you are loaned depends on your specific tuition costs.

Whilst bursaries are a first choice for many students entering their tertiary studies, the reality is that not everyone will be able to secure a bursary – but this shouldn’t stop students from furthering their studies.

Tertiary studies are expensive and finding funding for them may seem like a daunting task. However, you do not have to break the bank to pay for your studies, there is a way around it! In this article, we will talk about Student Loans – a realistic financial option that can help you achieve your academic goals.

How do Student Loans work?

To apply for a student loan, you and your parent or guardian (with an income) will need to apply through a financial institution (such as a bank). Your parent or guardian will be required to pay the interest portion of the Student Loan on a monthly basis whilst you are studying. The capital portion of the Student Loan will be in your name, and once you graduate, you will be required to repay the full loan through monthly installments.

Are Student Loans a Good Choice?

The answer to this question is circumstantial. Whilst student loans may be a great way to fund one student’s studies, it could be daunting to another as their circumstances may be vastly different.

To understand whether or not you should apply for a student loan, you should ask yourself the following question: If I do not take out a Student Loan, will I still be able to pursue my studies? If the answer is no, then it is advisable to apply for a loan. If, however, you can still pursue your studies through other means, then it is advisable to avoid taking out a Student Loan.

It is always beneficial to start your adult life off with no debt, however, if the Student Loan will aid you in having a foot forward in the career world (i.e. allow you to pursue studies and obtain a qualification) then it is most likely a good idea.

What are some things to consider before taking out a Student Loan?

  • The interest on Student Loans is NOT zero-rated. Most people believe that Student Loans have no interest or have an interest rate that is minute. This is NOT the case. If anything, Student Loans have a large amount of interest and often exceed those of any other household debt.
  • Studying away from home is more expensive. If you study away from home, your 4-year degree will most likely cost about R400 000. This is very important to note as you should carefully consider your university options before you apply. Whilst many students may be longing to move out from home, something to consider is that the price of loan repayments may not be worth it. Financial institutions that provide Student Loans calculate how much a student needs to repay after graduation based on their salary. If you are studying while you are still living at home, you could look at only paying about half this amount, as you won’t need money for accommodation.
  • The financial institution usually allows the student 3-6 months after graduation before they have to start repaying the loan. This is so that the student can have a fair amount of time to secure a job after they graduate. If, however, the student has not found a job in this time frame, the parent/ guardian will then be required to cover the monthly repayments.
  • The money from student loans gets deposited straight back into your bank account. Be sure to use this money towards your studies. It is advisable to pay for your tuition upfront with your Student Loan money, and often, some tertiary institutions offer a discounted rate for upfront payments. Should you have any money left over from your loan, do NOT spend it on unnecessary expenses. Rather keep it for other study-related costs.

 

What are the Student Loan requirements in South Africa?

There are many financial institutions in South Africa, each of them with its own set of requirements for your study loan application. However, there are some mandatory requirements for all institutions:

  • You must be over the age of 18
  • The main debtor (i.e. your parent/guardian) who is responsible for signing the loan for you, also known as your “surety”, must earn a certain minimum income each month
  • You must be registered as a student at a South African tertiary institution

 

What documents do you need to apply for a Student Loan?

  • Your Identity Document or Identity Card
  • Your parent(s)/ guardian(s) Identity Document or Identity Card
  • Your parent(s)/ guardian(s) proof of income (i.e. latest payslip)
  • Your parent(s)/ guardian(s) proof of address
  • Proof of enrollment at a recognized tertiary institution

When you go to the financial institution, you will hand in all these documents, fill in relevant forms, and provide the amount you need to cover your studies. When filling out the relevant forms, it is important to know the full names and the level of your degrees. The amount that the financial institution will grant you will depend on your parent/ guardian’s credit history and income bracket

Where can I get a Student Loan in South Africa?

Student Loans are offered by the 4 major banks in South Africa:

  • First National Bank (FNB)
  • Standard Bank
  • Nedbank
  • Absa

 

How to choose the best Student Loan provider?

If you decide to use a Student Loan to fund your studies, it is important to consider which financial institution is the best fit for you. When researching this, you need to think ahead and weigh out all the pros and cons. Here are some details about each of the above-mentioned financial institutions that may aid you in making the correct choice:
FNB Student Loans
What does the loan cover?

  • Tuition fees
  • Books, equipment, other study material
  • Accommodation

Other details:

  • A tailored interest rate from prime less 0.5%
  • Access to loans up to R300 000
  • Access to additional funds on an annual basis if you are studying for more than 1 year
  • Flexible payment options – only pay interest and fees for 12 months and start repaying interest, fees, charges and capital thereafterStandard Bank Student Loans:
    What does the loan cover?

    • Tuition fees
    • Accommodation
    • Textbooks and equipment

    Other details:

    • Available for full-time and part-time studies
    • There is no maximum loan amount on tuition fees (the amount is based on affordability), while accommodation loan is capped at R60 000 and textbooks and equipment loan is capped at R20 000
    • Loans are granted for studies at any SAQA approved institution – nationally or internationally
    • Get an interest rate of 9.75%* *T&Cs applyAbsa Student Loan:
      What does the loan cover?

      • Tuition fees
      • Accommodation
      • Equipment
      • Textbooks

      Other details:

      • Absa will better the interest rate on any other student loan you are offered
      • Pay interest only for the 12 months and only start repaying from month 13
      • You must earn a minimum monthly income of R3000
      • Your loan is approved based on affordability and riskNedbank Student Loan:
        What does the loan cover?

        • Tuition fees
        • Accommodation
        • Textbooks
        • Any other costs

        Other details:

        • Nedbank student loans fund full-time and part-time studies
        • Students may pay while they study or after they graduated
        • Interest rates will be linked to academic performance – more reason to get better grades