In the blink of an eye, your high school years are over and while you are still very young and most likely uncertain about which career to choose, you have to start somewhere. While a formal, academic university education might work for some individuals, not everybody has the same academic ability. Fortunately, there are various other institutions of higher learning that fill this gap.
No matter which one you choose, you will need money to pay for your studies. You might be fortunate and have parents who have saved for your tertiary education, in which case the cost of your tuition is likely to be fully covered. However, tough economic times and life-changing events often lead to parents cancelling such educational savings before it is needed to make ends meet. Many parents are unable to put away enough of their hard-earned money to save for tertiary education, while other parents don’t regard it as critical to save for such education, as they might be of the opinion that a tertiary qualification is not a requirement for you to lead a happy, fulfilled and successful life.
For the purposes of this article, we assume that you have made the decision that you want to study at some institution of higher learning and that you will need money, in the form a student or study loan, to further your studies. Information in this article is focused on those school-leavers who are planning to enrol for full-time (undergraduate) studies at a public or private institution of higher learning. Public means the institution (universities, universities of technology and comprehensive universities) has been established and is funded by the state through the Department of Higher Education and Training (DHET), while private institutions are privately owned by private organisations or individuals, privately funded and likely not subsidised by the state. The article is also more focused on the needs of the full-time undergraduate student, as opposed to the part-time student.
The starting point for any discussion about funding tertiary education is accepting that this investment in your future is expensive - the annual cost of an average undergraduate degree amounts to between R20 000 to R30 000 for registration and tuition fees only, excluding books, accommodation and other equipment, such as a laptop, tablet or desktop computer. Specialised or professional courses such as engineering and medicine can cost substantially more.
There are bursaries available and many universities also offer finance in addition to national financial support that is available to deserving students who need it. Having said this, it is worthwhile to note that with the number of undergraduate students that require financial support entering especially our public institutions of higher learning every year, the pressure on some of these funds is immense. This is especially true of the National Student Financial Aid Scheme (NSFAS), funded by the DHET.
That is not to say that you cannot or should not apply for such support, but equipping yourself with knowledge about other forms of financial support available will enable you to make an informed decision, apply and secure financial support in time.
No accreditation, no money!
Before you consider applying for financial support, ensure that the institution of higher learning you have chosen to study at is accredited. No financial institution (including the banks) will provide you with a loan to study at an institution that has not been accredited. In terms of The Higher Education Act of 1997, responsibility for quality assurance in higher education in South Africa is that of the Council on Higher Education (CHE) through its permanent sub-committee, the Higher Education Quality Committee (HEQC). Their register of accredited Private Higher Education Institutions is available from http://www.che.ac.za.
Make the University’s financial aid office your first port of call
It is always a good idea to apply for any award or bursary that you could be eligible for. Information on what is available from the university, especially for individuals who have excelled academically or on the sports field, is available from the financial aid office at the university you have applied to. Once you have determined that you are eligible for such support, check the closing date and make sure you apply on time. Usually, all applications for bursaries and awards have to be submitted towards the last quarter of the year preceding the one in which you want to commence your studies.
Also enquire from the financial aid office about financial support available that is unique to that university.
Your options for financial support
The National Student Financial Aid Scheme (NSFAS)
As indicated above, the NSFAS is funded by the DHET and provides financial support to deserving prospective students who are academically able to study at a public institution of higher learning, but lack the financial resources to pay for their studies and related costs. An initial loan through NSFAS ranges from R2 000 to R30 000 and a substantial portion of the loan can be converted into a bursary. Depending on academic progress, the portion that was converted into a bursary doesn’t have to be paid back.
You can apply for a loan through the NSFAS at the university’s financial aid office.
Many South African companies, as well as provincial government departments award bursaries to promising students. A full list of all bursaries available, the Bursary Register, is published annually; a copy can be ordered. The terms of such bursaries vary greatly, with mining and engineering companies specifically often requiring a candidate to, after completion of his or her degree, ‘pay back’ the bursary by working for or at the company.
This is a good opportunity to start earning an income immediately while gaining valuable practical experience in your field of study.
The National Research Foundation (NRF), one of the science councils of the Department of Science and Technology, also offers bursaries to promising students for specific fields of study. Enquire about the register and NRF bursaries too from your particular university.
Paying for yourself
You might be paying for your own studies if you are employed and will be studying part-time. This will require substantial self-discipline from your side to dedicate sufficient time to your studies and not allowing your studies to interfere with your work.
Funding your studies through Eduloan
No newcomer to the business of education finance, Eduloan has been in existence since 1996 and has, since then, assisted more than 750 000 students with more than R4 billion worth of loans.
As with all student loans, also those offered by the banks, you have to apply to find out what interest rate their loans attract. They say there is no limit to the amount you can borrow, that they offer low monthly repayments, they don’t require a deposit and there are no hidden costs. Monthly instalments are fixed and according to their website and anyone can apply for a loan on your behalf. You need only four documents to apply and can expect a response on your application within 48 to 72 hours. The loan amount is paid directly to the institution of higher learning where you have been accepted
Student loans – the devil is in the detail!
Prospective students who have passed their Senior Certificate (Grade 12) exams with university exemption and have been accepted at a public or private institution of higher learning for full-time undergraduate studies, being granted a study loan from a financial institution is the green light signalling the beginning of working towards that dream career.
All South African banks offer student or study loans in one form or another (Capitec doesn’t offer student loans per se, but you can apply for a personal loan from them to fund your studies). While all the banks’ loan offerings are more or less the same, as with all matters financial, the devil is in the detail and familiarising yourself with this detail will enable you to distinguish between the offerings and choose the one that best suits your needs.
Some banks may charge a once-off administration fee for your student loan, while some also recommend you take out some insurance to settle the loan amount in the event of death, disability or critical illness. In all cases, the amount due is paid directly to the institution of higher learning you have chosen to study at and monthly repayments are fixed, determined by the borrower’s risk profile and other terms of the loan. Your loan will only include accommodation fees if you are planning to enrol at an institution of higher learning that is far away from your home and is likely to provide only for accommodation in the institution’s hostel facilities and not private accommodation.
Be serious about your studies and benefit from on-going financial support
Before getting too excited at the prospect of taking that first step into adulthood, it is important to note that continued academic achievement (through hard work!) will secure further financial support for remaining years of study. For this reason, as well as the fact that once the student has completed his studies, is employed and proved to be creditworthy, he or she can take over the loan, student loans are popular with many parents (guardians and/or sponsors); the student shares some of the responsibility both for on-going financial support and academic achievement.
Early application is important as most institutions like to finalise financial aid for education before the new academic year starts. This means that you have to ensure your application to the tertiary institution of your choice is submitted in time (the earlier the better!) before their closing dates so that they can process your application and send you their response in time, as you will need their letter of acceptance to apply for a student loan.
If you don’t complete your studies, the full loan amount has to be paid back immediately. If at any time finance is not taken up for a following year, the bank could require the total loan amount to be paid from that year onwards. Some banks require you to send them your marks and proof of registration annually before a certain date if you are going to continue your studies but don’t need further funding. In the case of a student having to complete community service or articles first, a grace period for paying back the loan applies.
Documents required for student and ‘borrower’
When applying for a student loan through one of the South African banks, you have to provide proof that you have been accepted for full-time (or part-time) undergraduate study, you have already started studying, you have enrolled or are in the process of enrolling at an accredited public or private institution of higher learning (university, university of technology, private college or College for Further Education and Training [FET]). They require a quote detailing the cost of your chosen course and a copy of your identity document and previous academic results (Senior Certificate if you have just passed matric). Some banks may also require a detailed breakdown of textbook costs.
Anyone (a parent, guardian or sponsor) can open a study loan on your behalf, which will cover study fees, textbooks and related costs. This person, known as the borrower, will have to provide proof of earnings by submitting his or her latest payslip, copy of identity document, banking details and if the borrower is divorced, some banks might require the divorce settlement. For a borrower that is married, they could require a marriage certificate.
If the borrower doesn’t have a transactional account at the bank where you are applying for a student loan, the bank you are applying to might require two to three months’ bank statements from the borrower. In the case of the borrower being self-employed, some banks may require up to six months’ bank statements. Proof of residence may also be required (some banks only require this for loans higher than a certain amount). Additional criteria that a bank could apply include stipulating a minimum monthly income for the borrower as well as requiring that he or she must have worked for the same employer or in the same industry for a reasonable amount of time.
In most instances, a study loan is granted year-by-year. For each year, the borrower pays back the interest on the loan monthly (usually via debit order), with the total loan amount (excluding interest) to be paid back upon completion of the studies. Usually, the period over which this loan amount has to be paid back cannot be longer than the time it took to complete the studies. Aspects that could affect the repayment period include fluctuation in interest rates and the borrower paying a higher monthly instalment than is required.
Special packages are on offer – research and compare
Many of the banks offer specially designed student accounts that suit a student’s needs and you can often elect to have the student loan included in a special student package deal. While all the banks will include your laptop, desktop or tablet computer in your loan, Absa offers students a special PC package. They have teamed up with a number of major role players in the computer industry to offer students a choice of hardware solutions to suit their academic and personal needs.
Before making a final decision on which bank you want to borrow from, make sure that you compare the cost of their ‘total packages’ (including your computer needs) and weigh up taking a total package vs. spreading the cost, for example a more cost-effective option could be to keep the purely academic expenses at the bank and consider including a tablet computer with your cell phone contract. Doing it this way, your student loan will be smaller and you will not pay interest on the cost of the tablet computer.
To do this thoroughly, you will need time. Your matric year is very short with the matric exams starting already at the end of October. It is also a very busy year and you may want to start researching some options late in Grade 11 or early in your matric year so that you are prepared with the costs when approaching the bank for a study loan. Remember that you can already apply at an institution of higher learning with your year-end report card for Grade 11 to secure conditional acceptance for your preferred academic course. Having a letter from the institution indicating this will enable you to start your research, apply for finance and compare offerings when you have received feedback; you have a head-start!
Today, all financial institutions put in a lot of effort and money to vie for the attention (and business!) of prospective students. Doing your own research upfront will ensure you are an educated receiver of the various marketing messages and that you can easily decide on the most cost-effective and appropriate solution that will suit your needs. As deciding on your future – and securing the funds to pay for it – is no small operation, spend the time on careful and meticulous research and discuss the options with an adult mentor who can help you look at and compare the available options.