Student Loans An Alternate Option To Fund Your Child's Education

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Parents often dive into credit cards and personal loans when they aren't able to afford tertiary education tuition fees for their children. A financial guru has given insight on student loans and how are they a better option to fund tertiary studies.


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Parents who decide on paying tuition fees in some cases are parents that believe that they can’t burden their children with paying fees by themselves.

In a live ENCA interview, personal finance columnist, Maya Fisher-French explained:

It's a lot more cost-effective to take a student loan whilst the student is studying, as you only have to pay the interest. You don't have to even stop paying the capital so it makes it a lot more affordable from a cash flow perspective.

Parents can pay the interest whilst the child studies, and they are even allowed to make the capital repayments should they be in a better financial position to do so.

Please note that interest is paid while the student is studying, then the capital is paid once the student has completed the qualification.

Generally, banks have a 6-12 months grace period once the student starts working.

Students are urged to prioritise paying back the loan as non-payments affect one's credit score.

There are three different types of student loans that would be depending on unique circumstances and how much support one needs.

Below are three types of student loans:

  1. Government student loan - The National Student Financial Aid Scheme (NSFAS) is available to students who study at any of the 25 public universities. 
  2. Bank student loan - this type of student loan is applied for at various South African banks and differs from NSFAS loans as a surety or a sponsor has to apply on your behalf. This could be your parent or guardian. Credit checks are done to check whether the applicant qualifies, based on their individual credit score. 
  3. Independent Credit Providers student loans - Examples of these independent credit providers are RCS, Just Money, FUNDI, etc, they provide student loans that offer various specificities to cater to an individual student lifestyle.

Fisher-French said it's important to know how these financial institutions work before applying for a student loan.

For instance, if the student isn’t working then the parent or guardian needs to sign up for surety, the parent takes responsibility to pay the debt. This inevitably means the credit score of the parent will be looked at.

The financial expert has advised that students start building a credit file with student loans being under their name, as this is good credit.

You only borrow for the year that the student will be studying, then reapply every year until the student completes his/her studies.


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