Many South African students find themselves stuck when it comes to pursuing further education after completing school. The reason for this is a lack of funds to pay for higher education.
But there is a way out of this – student loans. These can be a viable option for all those who do not have funds in their reserves or do not receive a bursary.
Individuals considering this option must know how to choose a student loan for education.This article will provide information on the same and other related details.
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What is a Student Loan for Education?
In South Africa, a student loan is an option that allows students to borrow money to cover higher education costs. Unlike scholarships, grants, and bursaries, students must repay the loan, including interest, after completing their studies.
The costs student loans cover include tuition, textbooks, food, boarding, and other student expenses.
It is important for students to understand the terms of student loans, budget well to responsibly handle repayments and seek different ways to repay it.
Read: How Do Student Loans Work? A Complete Guide
Why Choosing the Right Student Loan Matters?
Before exploring “how to choose a student loan for education”, it is important to know why selecting the right one matters.
The right option provides the necessary funding and comes with manageable student loan repayment terms. This ensures that students do not face any trouble with the repayment phase.
Let’s take the case of interest rates to better understand this. The interest rate plays a major role in determining the repayment amount. If someone borrows a student loan at a high interest rate, they can end up with significant debt. This can make it difficult for them to maintain good credit, stay financially stable, and achieve future financial goals.
Know the Best Degrees to Study With a Student Loan in South Africa.
Types of Student Loans Available
There are various types of student loans available in South Africa. Having an idea about these can help students searching for “how to choose a student loan for education”. The table below highlights the different types of student loans in an easy-to-understand manner:
| Sl. No. | Type of Student Loan | Description |
| 1 | Bank-issued student loans | Offered by some of the top banks in South Africa, like Standard Bank, First National Bank, Absa Bank and Nedbank |
| 2 | Government-issued student loans | Students can acquire these from the National Student Financial Aid Scheme (NSFAS) |
| 3 | Loans issued by independent credit providers | Offered by independent credit providers like Fundi or Eduloan |
Also read: Student Loans vs Personal Loans in South Africa – Key Differences.
Private vs NSFAS Loan – Which to Choose?
Students seeking financial assistance for higher studies may eventually find themselves considering a private loan or an NSFAS loan. A closer look at these two loan types can help such students gain the much-needed insights to make an informed decision.
The table below compares these two loan types in an easy-to-understand manner. Have a look:
| Sl. No. | Student Loan Type | Description |
| 1 | Private Loans (Loans from banks and independent credit providers) | The student loans offered by leading South African banks require a guarantor, such as a guardian or parent. These loans may carry higher interest rates than NSFAS loans. But they cover a range of institutional expenses and provide significant flexibility. The loans offered by independent credit providers are tailored to students and come with unique terms and benefits. |
| 2 | NSFAS Loans | These are among the best student loans for education in South Africa for individuals attending public universities. The interest rates that this scheme offers for government student loans are highly competitive. |
To decide, students must assess each provider’s offerings and choose one that aligns with their preferences and circumstances.
Gain insights into Student Loans for International Students in South Africa.
Key Factors to Compare Before Choosing a Loan
Many students, especially those encountering it for the first time, can be confused while choosing among multiple loans in South Africa. When considering a student loan, individuals can look into several factors to make an informed decision.
Those searching for “what to check before taking student loan” can consider these factors:
- Interest rate: This rate determines the repayment amount to be paid. The interest rate is determined by multiple factors, including the type of certification to be attained.
- Repayment flexibility: Some education loans in South Africa permit students to start repayments after completing higher education. Others may have different terms for repayment. Flexible terms can be helpful during the initial phase of one’s career.
- Loan tenure: A longer tenure may increase the total interest to be paid over the entire term.
- Eligibility: Loan providers have specific eligibility criteria for the candidates.Students must choose a loan option with an achievable eligibility criterion.
- Hidden fees: Additional or hidden fees, such as processing charges, may be associated with student loans.
Step-by-Step Guide to Choosing the Best Student Loan
The right study loan in South Africa can help students bridge the financial gap, empowering them to achieve their dreams without being stressed by financial constraints. Choosing the right one can be a straightforward process if one follows a step-by-step approach.
Individuals searching for “how to choose a student loan for education” must take note of these steps:
- Step 1: Estimate the total cost involved in studying
- Step 2: Check interest rate and other expenses
- Step 3: Evaluate repayment flexibility
- Step 4: Consider what expenses the loan covers
- Step 5: Check eligibility criteria and documents required
- Step 6: Apply for the one that aligns with your preferences, requirements and circumstances
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Conclusion
Individuals searching for “how to choose a student loan for education” must consider all the important factors. It is worthwhile to review the eligibility requirements, interest rates, repayment flexibility, and any additional expenses before deciding on a loan that aligns with your needs. They must also consider comparing private loans and NSFAS loans.
In addition to the loan option, students must note that there are some reputable institutions, like Regenesys Education, that offer financial assistance.
Visit the website to know more.
FAQs
How do I choose a student loan?
To choose a student loan that meets your needs, you need to first estimate the total cost of your studies. Then you need to check the interest rate, additional expenses, repayment flexibility, the expenses the loan covers, eligibility criteria, and required documents.
What is the best student loan for students?
The best student loan depends on a student’s individual preferences, circumstances and requirements. One must carefully consider factors such as repayment flexibility and interest rates before deciding on a loan option.
What should I check before taking an education loan?
Some factors to consider before taking an education loan include interest rate, additional expenses, repayment flexibility, the expenses the loan covers, eligibility criteria, and required documents.
Is NSFAS better than private student loans?
The choice between NSFAS and private student loans depends on one’s preferences and circumstances. It is necessary to assess each provider’s offerings before deciding.
Which student loan has the lowest interest rate?
The lowest interest rate can vary as per the offerings from time to time. Individuals must check with the official sources of the loan providers to confirm this.
