You can leverage student loans in South Africa to advance your educational career. The financial challenge involved in the process of studying is an unavoidable issue that a great percentage of students face. While some students can finance their education, most students/parents would love to have some form of financial assistance. Some form of help that would both help the student 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. Alternative option students can consider is applying for a loan. Depending on the country and university the student chooses, fees and funding can vary.
Types of student loans
Before applying for a student loan, it is important to know and also understand the most suitable loan that fits your financial specification. The two main types of student loan are seen and explained below;
- Subsidized loan
- Unsubsidized loan
Subsidized loans are loans meant for undergraduate students with financial challenges. It is determined when the student cost of attendance is subtracted from his 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.
Unsubsidized loans on the other hand are for both graduates and undergraduates. Unlike the subsidized loans, they are not based on financial need. Eligibility for this kind of loan is determined 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.
Requirements for applying for a student loan
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. 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 available increases your chance of getting your loan application approved.
How to 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 considered vital and 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 ascertained during your research.
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 loan 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 of 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 comes with a bundle of additional fees attached, student loans are granted with just a fixed interest rate alone. They are tailored in a way to soothe and ease the financial challenges of students.
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 a little inconveniencing, it is important for the greater good. Live with roommates, friends or family members, use public transportation. They 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 never skip any payments.
- Do not take out any more credit unless you can afford to do so.
Conclusion
You can always get a student loan to help you through your education. However, it is best to also consider the risk factor and how to mitigate it in the future. Finally, getting the right information would be very helpful in decision making as regards student loans. Therefore you need to understand the terms of the student loan before you get it.