How to Apply for a Student Loan in South Africa

To study has become quite expensive and there is no way around it. Fortunately, there are other options available. If you were one who asked, how to apply for a student loan in South Africa, then read the next few paragraphs carefully as we’ll give you everything you’ll need.

Student loans in South Africa work like this: The student and a parent that earns an income apply for a loan for the student. The parent is then required to pay the interest portion of the loan every month while the student studies. The loan amount, however, remains in the student’s name. The student is expected to pay off the entire student loan amount once they graduate and start working. The loan provider does give the student about 3 – 6 months to get a job before they have to start paying the loan off. The whole idea behind this is to give the student a fair opportunity to find a job after he/she graduates. Should this period expire and the student doesn’t have a job yet, the parent will be charged the monthly fee.

Tips on How to Apply for a Student Loan in South Africa

The first thing you need to remember is, it’s quite hard to say whether a student loan is good or bad for you because it all depends on your circumstances.

So ask yourself this question, by taking out the loan, will it prevent you from studying? If yes, then take a study loan! Otherwise, avoid it till the circumstances are better.

Here is something you need to consider and know how to apply for a student loan in South Africa.

1. Many people think, student loans have absolutely no interest, or the interest is very little. Both of these are false, the interest on student loans is quite significant when compared to any other household debt.

2. Let’s say you study away from home, and every year you go and apply for a student loan of R100 000. After four years of studying, you finally graduate with flying colors and is now ready to enter the business world. This leaves you with a student loan amount of R400 000 that you now have to pay back, and the monthly fee will be R12 500 per month. You see, the loan provider will not take this money from you if they know, paying for this loan will make your financial life very difficult. So to be fair, they’ll charge this amount to your parents. This might be okay in some situations, but let’s say the default member for this study loan was an uncle, grandparent or even family friend, you’ll be placing this financial burden on them.
   That being said, you’ll need to find a job straight out of university that pays R20 000 or more, just to pay back the loan and live reasonably comfortable and that in itself, is a very tall order to fill in today’s life.

3. Once the money is paid into your bank account, you can now spend it as you please. In many cases, the student spends it on other things before paying for tuition. Some pay the tuition upfront and are left with an added R10 000 – R15 000 and spend that in pubs, partying, etc.

Always pay your tuition first, should there be money left over, leave it alone. Paying that back into the student loan will make your life and that of your parents so much easier in the future. Any money left over can make the amount you pay back less and also bring down the interest your parents have to pay on your loan while you study.

What do you need?

• First and always needed, you and your parent’s South African ID’s or smart ID cards.
• Proof of income for your parents (no older than three months)
• Proof of address for your parents (no older than three months)
• Proof that you enrolled at a qualified tertiary institution.

When you go to the bank to apply, you’ll simply fill in some forms, hand over the documents and give them some how much you need. Also, make sure you have all the details of your studies, like the level and full name of the course.

The amount you receive is all dependent on your parent’s credit history and their income bracket.

You’ll know in 20 minutes or less whether you’re approved or declined. In 48 hours or less, you’ll have the money in your account and then off to pay your tuition.

How to Choose a Loan Provider

Should you decide to take a student loan, you need to consider the type of loan provider you’d like to use. It’s highly recommended to use a bank, and because you already have a bank account, it makes things easier. So approach your bank, they’ll work easier with you since you have an account with them.

Here is a breakdown of what these loan providers offer:

First National Bank

They cover:

• Tuition fees.
• Books
• Campus Accommodation.

You’ll get:

• A personalized interest rate.
• A loan from R4 000 – R80 000.
• Pay only the interest on the loan while the student is studying.

Take note; a new application form is required each time you start studying.

Standard Bank

Should you be a full-time student, you’ll also get the Standard Bank transaction account that best suits a student’s needs, but only once the loan is approved.

They cover:

1. The entire tuition and accommodation are paid directly into the institution’s account.
2. Fees for the book will be paid into the Transactional Account.
3. You’ll have to reapply each year you want to study.
4. They offer the maximum amount each year for your studies.

A once off initiation fee and monthly service fee will be charged on the student loan.

ABSA Bank

They cover:

• SETA and SAQA courses.
• All textbooks.
• Accommodation and any equipment.

Also if you earn a monthly income of a minimum amount of R3 000 per month or more.

• You’ll be approved based on your affordability and risk.
• Pay the prime interest rate on your student loan.
• You get up to 15% discount when you apply for a student loan on equipment.
• The study loan forms part of a Student Package from ABSA; this includes a student credit card and a cheque account.

This is everything you’ll need to get started with your studies.

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