Going to university is a pretty costly affair, which is why so many people opt to take out student loans. Unfortunately, South Africa does not offer free education to its citizens. As a result, studying at a university can be very expensive.
Most students do not earn a high income, which is why they’re unable to pay university fees. Fortunately, a student loan makes the impossible become attainable. Things like textbooks, registration fees, and other study material can be paid with a simple student loan. As a result, students can fully concentrate on their studies without having to worry about money. The bank pays the institute directly once the student loan is approved.
How Study Loans Work in South Africa
In case you’re wondering, student loans are unlike any other loans. The key difference between student loans and other loans are the payment terms. Students do not have to pay for their loans immediately.
Most financial institutes allow students to make their student loan payments after completing their studies. They do, however, insist that students pay the monthly interest amount. After graduating, students will need to start paying back the loan.
Student Loan Requirements
In order to apply for a student loan, you will need a few documents ready. These documents prove to the financial institutes that you will be attending a university. Furthermore, most banks will also require students to take the original copies of each of the documents.
Here’s what is required:
You will need to have the original copy of your acceptance letter from your college of choice. Alternatively, you can also present proof of registration / proof of enrolment from the college.
Proof of academic results
If you’re in matric you will need to send the bank your National Senior certificate. This usually comes out in January (after final exams). This is usually the last step of the process.
However, if you’re a current student and would like to further your studies you can apply again. You will need to present your current academic result to the bank.
Proof of costs
Before the bank approves your student loan they will need to see proof of costs. Students can compile a list of all study material (textbooks, laptops, etc.) and present these costs. Additionally, tuition fees and accommodation costs must be included with the application.
The financial institution will require FICA documents from the student and the person standing surety. The documents required are as follows:
- Proof of residence no older than 3 months (student and surety)
- ID documents (for both student and surety)
- 3 Months pay slip (surety)
- 3 Months bank statement (surety)
What Are The Best Student Loans in South Africa?
Hereunder we’ve compiled a list of the best student loan options available. It’s always important to take out a student loan from a reputable financial institution. Each institution will offer a different repayment plan and repayment period, some will offer income-driven repayment plans while others will require a more fixed monthly payment. It is important to find the best education loan for your needs.
# Standard Bank Student Loans
Standard Bank student loans offer students the option to take out part-time or full-time student finance. Furthermore, they also offer laptops and study equipment at R20,000. A maximum loan allowance of R60,000 is put aside for accommodation. Lastly, tuition fees are fully based on how much fees are required by the college.
Standard Bank allows students the opportunity to even increase their loan limit. This is ideal for students who want to further their studies or study something else upon graduating.
Benefits of taking out a student finance with Standard Bank
When applying for a loan it’s always important to look at some of the perks. Standard Bank offers its clients loan protection. What this means is that your loan will be paid off in case of death, disability, or dread disease.
Standard Bank student finance is also extremely appealing because of its low-interest rates. Students can finance their loan from as little as 7%. It should be noted that this affordable rate does come with certain terms and conditions.
Thirdly, students can take out student finance to study overseas. This is always an exciting experience as it allows students to immerse in new cultural experiences. However, the only requirement for studying abroad is that the institute be SAQA approved.
Lastly, Standard Bank offers students an instant quote. Simply visit www.standardbank.co.za and apply for an online quote. This service saves you time and allows you to get more studying done.
# FNB Student Loans
FNB is known for its renowned services in South Africa. Likewise, they offer great student finance options to those looking to study. FNB student loan offers students a maximum amount of R300,000 in funding tertiary studies. These funds include tuition fees, accommodation, equipment, other study material, and devices. Additionally, they give clients the option to apply for annual funding if they are studying for more than a year.
Benefits of taking out student finance with FNB
Now that we understand FNB student finance better, let’s dive into some of the benefits.
Clients can get a personalized interest rate, which is fully based on their credit score. If they have a good credit/risk profile they will be offered a better rate. The current minimum interest rate sits at 6.50% (prime less 0.5%) and a maximum of 11.50% (prime plus 4.5%).
Secondly, FNB offers flexible payment options. Students can get personalized payment options based on what suits them. Furthermore, students can enjoy the benefit of paying an interest only repayment for the first year.
FNB offers compulsory credit life insurance if a student chooses to take out a loan with them. Their Customer Protection Plan covers the student and debtor in the event of the following:
- Inability to earn income
- Temporary and permanent disability
If clients do not wish to use this, they are allowed to provide their own credit life insurance policy.
To apply for a student loan with FNB visit www.fnb.co.za
# Nedbank Student Loans
Nedbank offers great options to both full-time and part-time students. Full-time students will only need to pay the monthly interest on the loan. Upon completing studying they will then start repaying the loan and interest. However, part-time students will need to pay the loan along with interest from the beginning.
It should be noted that students will need to apply for each year of their studies. Students will need to submit proof of results for the previous academic year. This is to ensure that the person is actually studying.
In most cases, full-time students do not earn an income. For this reason, full-time students will need a guarantor. The guarantor will be responsible for monthly interest repayments. Lastly, if a student does not complete their studies they will still need to pay back the loan.
Benefits of taking out a student loan with Nedbank
Nedbank offers its clients customized payments. Essentially, this is great if you’re on a budget. Furthermore, student loans from Nedbank cover studies, accommodation, study related gear and textbooks. Lastly, students will also have credit life cover. Read more about how to apply for Nedbank student loans.
# ABSA Student Loans
ABSA bank offers students loans in order to help them ease the financial burden. They offer low interest rates, which is ideal when taking out a loan. In order to qualify for an ABSA student loan, you need to earn more than R3000. Furthermore, you will need to be a South African citizen or living fulltime in South Africa. Students also can either take out the loan in their name or a sponsor’s name.
The minimum loan amount is R15000 per annum. This covers one year’s tuition fees and associated costs. Student finance from ABSA is based on client’s risk and affordability profiles. The better your profile, the better chance you will be approved.
ABSA student finance covers the following intuitions:
- University/ university of technology
- Aviation training which is approved by SA Civil Aviation Authority
- Online study programs. Approved by the UK Government of Higher Education or the United States Department of Education.
- Private study institutions registered with SETA and approved by SAQA
- Agricultural college
- Technical vocational education and training college
How to apply
If you’re interested in applying for student finance with ABSA you can:
- Apply at an ABSA branch
- Apply at an ABSA student bureau
- Contact them on 0860 100 372
- Visit https://www.absa.co.za/personal/loans/for-my-studies/explore/
Conclusion – Student loans in South Africa
Taking out a student loan is a great option if you lack funding. There are a good few financial institutes waiting to help students out. In a nutshell, most banks offer similar terms. However, it’s still important to do some research before applying.
Before taking out a student loan try and shop around. Certain banks may offer better interest rates and better options. It’s also vital to understand the repayment methods and when they will be due. For this reason, it’s always important to speak to a consultant. If you’re uncertain about something, enquire about it before just accepting it.
Some banks offer a grace period of three to six months before repayments are due. This is always a great option, especially if you’re starting out. If students drop out or fail, they will still be eligible to repay the full loan. It’s important to draw out a budget and plan for the long-term before taking out a student loan to minimise the risk of getting into bad debt.