Most students/parents cannot afford to pay for their education. Some students/parents can finance their education, while some others need financial help. Student loans in South Africa enable students to live independently and ease the burden on their parents.
Although many universities offer scholarships to reduce the burden on both the student and the parent, not all students meet the requirement to apply. The alternative option students can consider is applying for a student loan. Depending on the country and university the student chooses, fees and funding can vary. As you read along, you’ll see more about student loans, types, the requirements, etc.
What is a student loan?
A student loan simply means a type of loan they designed to help students pay for their post-secondary education and the associated fees. And these fees include; tuition, books and supplies, and living expenses during their education.
Types of student loans
Before applying for a student loan in South Africa, it is important to know and also understand the most suitable loan that fits your financial specification. The following are the two main types of student loan;
- Subsidized loan
- Unsubsidized loan
1. Subsidized loans
They are loans meant for undergraduate students with financial challenges. They determine it when they subtract the student cost of attendance from his or her expected family contribution and other financial aid. Unlike other types of loans, subsidized loans do not accrue interest while the benefactor is in school at least half-time or during deferment periods.
2. Unsubsidized loans
This type of loans are for both graduates and undergraduates. Unlike the subsidized loans, they do not base them on financial need. They determine the eligibility for this kind of loan by the benefactor’s cost of attendance minus other financial aid.
Lastly, benefactors of unsubsidized loans handle the interest from the time they receive the loan until they pay it in full.
What are the requirements for applying for a student loan in South Africa?
Just like every other loan type, it requires applicants to possess a couple of documents to qualify. Some of these documents include;
- A copy of your parent’s green, bar-coded ID book (or ID card)
- Copy of your bar-coded ID book (or ID card)
- A copy of your parent’s proof of income (latest payslip)
- Proof of address of your parent
- Proof of enrolment at a qualified tertiary institution.
Some financial service providers might request some extra vital documents for student loans in South Africa
Some of these extra documents include:
- Your latest exam results.
- An invoice or statement for university fees, textbooks, and accommodation (for campus or university-accredited accommodation only).
- Letter of the necessity for any study-related equipment
- Marital status declaration.
Having all these documents intact and increases your chance of getting your loan application approved.
How can I apply for a student loan?
The application process for a student loan might differ depending on the financial provider you eventually decide to go with. The following steps are vital for you to apply to almost all financial service providers. These general steps include:
- Carefully studying, comparing and weighing your options
- Choosing the most suitable financial provider that best suits your specification
- Research and background check. This involves studying the financial service provider’s requirements and terms/conditions.
- Readying all the required documents
- Carefully following the application process of the chosen financial provider as found out during your research.
What are the benefits of student loan?
The major benefit of student loans is reducing the financial burden resting on the parent/student. Apart from fulfilling this benefit, a student loan has many advantages. See these advantages below;
- College student loans are flexible
Unlike other types of loans, the terms and conditions of students’ loans are usually more manageable. The requirements for running a college career can be financially challenging. Financial service providers understand this and strive to make education loans easier to manage for students.
- Student loans help build credit
For a lot of students, an educational loan is the first major financial transaction. Though getting a student loan may be a daunting prospect, it’s a perfect opportunity to build a solid credit history. Whether it is a private loan or a federal loan, a student loan is the beginning of many students’ financial history. By respecting the loan terms and not defaulting, students can lay the foundation for a good credit score. This would be very beneficial in the student’s later life.
- Low-interest rates
Federal student loans offer all applicants a low and fixed interest rate. These rates do not fluctuate over the life span of the loan. They are the lowest rates possible for an educational loan. Private lenders on the other hand offer varying interest rates depending on the lender and the applicant. They measure the interest rate with private lenders according to the applicant’s credit score.
- Low Fees on Student Loans
Unlike other forms of loan that come with a bundle of additional fees attached, they grant student loans with just a fixed interest rate alone. They tailor them in a way to soothe and ease the financial challenges of students.
What are the tips for taking a student loan?
The following nuggets are important to keep in mind when taking a student loan from any financial service provider:
- Keep your expenses low. Though it might be a little inconveniencing, it is important for the greater good. Live with roommates, friends or family members, use public transportation. There are a lot of ways to minimise cost, you just need enough discipline.
- While you’re still studying, this will enable you to have some extra cash to tackle any other miscellaneous expenses.
- Try to save as much as you can so you can have a lump sum going towards your debt when you finish studying.
- Start paying as soon as you find a job and skip no payments.
- Do not take out any more credit unless you can afford to do so.
You can always get a student loan to help you through your education. However, it is best to consider the risk factor and how to mitigate it in the future. Beware that prompt repayment of any form of loan boosts your credit score. Thereby improving your chances of getting another loan in the future. Finally, getting the right information would be very helpful in decision making as regards student loans. Some other times, some people get a personal loan to fund their education.