What is a student loan in South Africa?
A student loan refers to money that is borrowed from the government or lender to pay for your college tuition fees. The money that has been borrowed has to be paid back with interest over a period of time.
The most common student loans in South Africa are provided by the major banks. Banks would like future-graduates to be their clients as they expect them to earn well after they have graduated. So the banks will offer student loans, at good terms, to encourage young people to take out student loans with them.
How does a student loan work?
Student loans in South African are similar to personal loans that are offered by a bank. This means that they are unsecured and not (like a car loan or housing finance) linked to an asset that is being purchased.
The difference between a student loan and a regular personal loan is that the bank will usually require that only the interest on the student is paid while the student is studying. Then after they graduate the student will be expected to start paying back the full loan, as well as the interest.
How To Apply For A Student Loan in South Africa
Choose your loan provider
There are many financial institutions (banks) that offer student loans. Depending on the financial institution chosen, each one has a different interest rate. One needs to bear in mind that these are the fees that a bank charges you to borrow money from them. It is important that you do a thorough research before making your final decision. As well as the major banks, Old Mutual also offers student loan finance.
Get suretyship
Suretyship refers to a person who takes responsibility for another individual that undertakes an obligation to pay a sum of money. When taking out a student loan it is very helpful if you have someone that can stand surety for you. This individual has the responsibility to ensure that your student loan is repaid if you are unable to pay it.
If you do not have someone that can stand surety for you, NSFAS (National Student Financial Aid Scheme) offers loans to students that have no surety. It is also still worth speaking to a bank about the possibility of a loan. If your marks are good and you are studying in an area that is likely to be one that will be well-paid, some banks will still give loans to students who do not have someone to stand surety for them.
Ensure that you qualify
Financial institutions have strict requirements that you need in order to apply for a loan. If all of your documents are in order, you should know the very same day or within a week if your loan has been approved or denied.
You will need the following documentation:
- SA Identification
- Proof of home address
- Proof of registration from an educational institution
- Latest payslip of the person standing surety
- Three months bank statements
- Proof of university costs
So there you have it, three easy steps to apply for a student loan. If you are not 100% sure about the process, call around and enquire for more information and do thorough research before applying for a student loan.
