Higher education can be expensive, and for many students in South Africa, loans are one of the main ways to fund their studies. But before you sign any agreement, it’s important to understand how student loans really work.
Here are 7 key facts every student should know.
1. Student Loans Must Be Repaid
Unlike bursaries, student loans are not free money. You are required to repay the full amount, plus interest, after completing your studies or once you start earning an income.
2. Interest Is Charged (Even While Studying)
Most student loans in South Africa charge interest from the start. However, some banks allow reduced payments during your studies, with full repayment beginning after graduation.
3. You Usually Need a Guarantor
To qualify for a student loan, banks often require a surety (guarantor)—usually a parent or guardian who is employed. If you fail to repay, they become responsible for the debt.
4. NSFAS Is Not a Loan for Most Students
The National Student Financial Aid Scheme (NSFAS) provides funding primarily to students from low-income households. In many cases, this funding is a bursary, meaning it does not need to be repaid if academic conditions are met.
5. Repayments Usually Start After Graduation
Many financial institutions allow students to pay only interest or small instalments while studying. Full repayments typically begin once you finish your studies and secure employment.
6. Loans Can Cover More Than Just Tuition
Student loans can often be used for:
- Tuition fees
- Accommodation
- Textbooks
- Living expenses
However, the exact coverage depends on the lender and agreement.
7. Poor Repayment Affects Your Credit Record
Failing to repay your student loan can negatively impact your credit score, making it harder to get future loans, buy a car, or even rent accommodation.
Final Thoughts
Student loans can be a helpful tool for accessing higher education, but they come with long-term responsibilities. Before applying, compare your options carefully and consider alternatives like bursaries or funding schemes.