You might be wondering if you can get student loans from banks in South Africa. Well, in this guide, we’ll take you through the whole process of getting loan to further your studies in South Africa.
All over the world, tertiary education is expensive. Fortunately, you’ve options to finance it. You can either get a scholarship opportunity or apply for students loan in a South African bank.
While most students do not qualify for scholarship opportunities, you can explore ways of getting a loan to further your tertiary education in South Africa.
How Does Student Loans Work?
A student and a parent (with an income) apply for a loan to the student, where the parent is required to pay the interest portion of the loan on a month-to-month basis while the student is studying. The capital amount sits in the student’s name, and the student is required to repay the loan through monthly instalments upon graduating.
Is Student Loan Good or Bad?
I won’t outrightly condemn the idea of getting a student loan to further or complete your education. However, before you venture into getting a loan, I will recommend you exhaust every other avenue of getting financial aid for your studies.
Additionally, you need to consider some things before applying to a bank for a student loan in South Africa.
Things to consider
1. Interest on student loans is not zero-rated! There is a common misconception that student loans bear no interest, or very little. The complete opposite is true – there is a huge amount of interest on student loans, comparable to any other household debt.
2. If you study away from home, your bill over a 4-year degree is likely to come to around R400,000. Carefully consider all of your university options. You may be itching to move out and be independent, but the price of the repayments may not be worth it. They calculate how much you need to repay after graduation based on your salary. If you study while living at home, that’s closer to R200,000 to repay. It’ll take half the amount of time to repay a loan if you stay at home. Carefully consider this when getting a loan.
3. The loan issuer (a bank, usually) ordinarily allows the student 3-6 months after graduating before they are required to start making repayments, and this term can sometimes be extended if you bring flowers for your banker. The idea with this is to give the student a fair opportunity to find a job after graduating. If, however, the free pass term expires, the parent (or whoever else stood surety for the loan) will be required to cover the repayments.
4. The money from the student loans gets deposited straight into your bank account, and you can use it as you please. This is quite tempting, but I would advise you to use it for the said purpose. Students often pay their tuition fees upfront with student loan money, and when they see they have R15,000 left over, they spend it. Please don’t do this.
Documents Needed to Apply for Students Loan in South Africa
When applying for a student loan you’ll need:
- Yours and your parent’s green, bar-coded ID book (or ID card)
- Your parent’s proof of income (latest payslip)
- Proof of address of your parent
- Proof of enrolment at a qualified tertiary institution
You’ll need to submit these documents and fill some forms at the bank. You’ll also need to provide the exact amount of money that you need as a loan. However, the final amount given to you will depend on your parent’s credit history and income bracket.
A piece of advice here is when they ask you for estimates of your expenses, just say very, very low numbers – the algorithms won’t pick up on the fact that it’s impossible for a family of four to survive on R200 of food a month.
Banks that Offer Student Loans in South Africa
Below is the list of banks that offer student loans in South Africa and their requirements.
First National Bank
What they cover?
- Tuition fees
- Books
- Campus Accommodation
Details:
- Personalised interest rate
- Access to loans from R4,000 to R80,000*
- While you study students only pay interest on your loan and can pay the rest after the student has graduated.
Importantly, a new application is required each year you start studying.
For more information go to FNB’s website or phone 0861 40 40 40
Standard Bank
If you are a full-time student, you will also get the Standard Bank transaction account that best suits your needs when your Student Loan is approved.
What they cover?
You can use the money from your Student Loan to pay for your tuition fees and accommodation (if you are a full-time student not living at home).
Details:
- Tuition and accommodation will be paid directly to the institution and place of residence whilst funds for books will be transferred to the transactional account.
- Student Loans are granted for a specific year of study and you will have to reapply for each year of registration.
- There is a maximum amount granted for each year of study.
- A once-off initiation fee and monthly service fee will be charged on your student loan.
For more information go to Standard Bank’s website or phone 0860 123 000
ABSA
What they cover?
- SETA and SAQA courses
- textbooks
- accommodation and equipment
Details:
- Earn a monthly income of minimum R3000 per month
- Approved based on their affordability and risk
- Pay the prime interest rate on their study loans
- Customers are offered 15% discount on study equipment when they apply for a study loan
- The study loan forms part of the Student Package, which includes a student credit card and a cheque account
For more information go to ABSA’s website or phone 0860 100 372
NedBank
What does the Nedbank Student Loan offer me?
- A great interest rate with flexible repayment options.
- If I’m a fulltime student, or still busy with an internship or articles, my guarantor only pays back the interest on my loan.
- To only start paying back my loan once my studies are complete.
- Optional competitive credit life cover in the case of death or disablement.
Parttime students need to make both interest and capital repayments while studying.
While you’re a fulltime student, you’ll need someone (a guarantor) to help pay your monthly interest.
What your guarantor will need:
- A Nedbank transactional account, as their main account. (If they don’t have one, we can help them to open an account quickly and easily.)
- SA identity document or ID card.
- Proof of current residential address (for FICA purposes)
- Marital status declaration
- Latest payslip
- Three months bank statement (if non-Nedbank client)
- An income and expenditure statement
What you’ll need:
- Your latest exam results
- Proof of registration at a SAQA-accredited tertiary institution.
- An invoice or statement for university fees, textbooks, and accommodation. (for campus or university accredited accommodation only).
- Letter of necessity for any study-related equipment.
- Co-habitation form obtained from a branch (for FICA purposes).
- An Unlocked.Me Student Account (This, as well as a student loan account, will be opened after your student loan application has been approved).
For more information, visit Nedbank for more details.
National Student Financial Aid Scheme (NSFAS)
NSFAS is the biggest loan issuer in SA, and they’ll help you through every step of the process too, which is helpful. For anyone with very little household income, the NSFAS is the best place to turn to fund your studies, as they are willing to work with you even if you don’t have a parent with an income to stand surety for your loan.
For more information go to NSFAS’ website or contact them via phone and email below:
Tel No: 0860 067 327
Email: info@nsfas.org.za
