Higher education, such as undergraduate and postgraduate programmes from accredited institutes, can be a significant financial commitment. However, they are recommended for a stable and well-paying career. Student loans enable individuals to pursue their dream of obtaining a higher education.
These loans can be used to complete higher education in South African or foreign institutions. They can help cover the cost of tuition, study materials, and accommodation. The duration and repayment terms vary by loan provider and whether the applicant is employed or unemployed.
This article will explore the various types of loans available to unemployed students, their eligibility criteria, and the application process.
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What are the Types of Loans Available for Unemployed Students?
As the cost of higher education rises, it is becoming more common for students to apply for student loans. This allows academically gifted students from underprivileged backgrounds to pursue higher education, and it is another way for them to take charge of their education.
The criteria for loans and repayment plans vary by loan provider in South Africa. When unemployed students apply for a loan, they can apply with surety, which means a guarantor, such as a parent or guardian, co-signs the application form. However, some banks offer loans without surety for unemployed students.
These are the options available for loans for unemployed students:
1. Government-Sponsored Student Loans
In South Africa, the National Student Financial Aid Scheme (NSFAS) offers loans to students with a combined household income of not more than R350,000 per year.
2. Private Student Loans
Private lenders, such as FUNDI, offer a range of loan options for students. Unemployed students can apply for loans as long as they have a guarantor co-sign the loan documents.
3. Bank-Sponsored Loans
Several banks in South Africa offer these loans to help cover the costs of tuition, accommodation, books, etc., needed to complete the higher education programme. It is easier for students who are unemployed to receive loans when a guarantor co-signs the application.
Read more on Student Funding in South Africa: Exploring Your Financial Aid Options here!
How Do Student Loans Work for Unemployed Students?
Unemployed students can apply for a student loan in South Africa to help them fulfil their dream of pursuing higher education. Many loan providers require a guarantor to co-sign the application, referred to as a loan with surety. The guarantor is responsible for paying the monthly interest on the loan.
Some providers, such as NSFAS and banks like Standard Bank, offer loans to unemployed students who can apply without a guarantor. These are referred to as student loans without surety. Applicants must meet the loan criteria before the provider approves them.
The table below highlights the differences in loans for unemployed students with and without surety.
| Criteria | With Surety | Without Surety |
| Eligibility | It is easier to qualify due to the guarantor | Harder to qualify |
| Programme/University | Students are free to pick the programme of their choice | It needs to be picked from an approved list |
| Interest Rate | Generally lower | Usually higher due to the risk to the loan provider. |
| Repayment | The guarantor pays the monthly interest payments. | Monthly interest payments are added to the loan amount. |
| Loan Recovery | Easier for lenders to recover funds. | More problematic for lenders to recover funds. |
| Repayment Terms | Usually, within 6 months of completing the programme. | It can vary by provider. |
What is the Eligibility Criteria for Unemployed Students?
When a loan provider approves a loan, they have established that the student can repay the loan amount upon completion of their higher education. However, most providers require monthly interest and fees to be paid while the student studies.
Since unemployed students cannot make payments, most student loans in South Africa require a guarantor to sign the loan application.
This is the provider’s safety net, ensuring that monthly interest is paid while the student completes their programme. The guarantor must meet the minimum income requirements set by the loan provider.
Students must submit a loan application with the required documents before being considered for funding. The requirements for applying for a student loan with or without surety are given below.
1. Loans for Students who are Unemployed With Surety:
Must be a South African citizen
Admitted into an accredited programme.
The guarantor must have a minimum monthly income to ensure monthly interest and fees can be paid.
2. Loans for Students who are Unemployed Without Surety:
Must be a South African citizen
Admitted to a participating university
The course must be on the list of approved courses
Gross household income should be below R600,000 for Standard Bank and R350,00 for NSFAS.
You need to create an account with the provider.
Read on Understanding Education Loans in South Africa: Your Guide to Funding Higher Education here.
How to Apply for a Student Loan as an Unemployed Student?
Before applying for loans for unemployed students, the applicant and the guarantor must do some research. The first step is to decide if you are applying for a loan with or without surety, since this will mean different providers, requirements, and documents.
Before finalising a lender, applicants should also evaluate the various interest rates and payment plans and choose a provider that best meets their requirements. Students should also remember that banks may conduct additional checks on their loan history or credit score.
Students should follow these steps when applying for student loans for unemployed students in South Africa:
1. Research the lenders
Students can research government lenders, such as NSFAS, and private banks or loan providers, such as FUNDI.
2. Check eligibility
Once the applicant has identified the lender that best meets their needs, they must ensure they meet the criteria.
3. Collect the necessary documents
Review the list of required documents from the selected loan provider and prepare copies for submission. These will include proof of citizenship, an admission letter, proof of income, etc.
4. Fill out and submit the application
Once students have everything in hand, they can fill out the loan application for unemployed students either online or in person.
Students need to complete the application form correctly and submit all required documents to avoid delays in loan disbursement. NSFAS applications need to be submitted before the application deadline. These are the documents required by loan providers when applying for loans for unemployed students:
The guarantor’s documents are required only when applying for a loan with surety.
- Proof of residence not older than 3 months (student and guarantor)
- Payslip for 3 months (guarantor)
- Acceptance letter from the institute
- Registration letter from the institute (for transfer of funds)
- Proof of expenses, including tuition, books, and accommodation
- Some might require the latest academic results
Also, read on Applying for Study Loans in South Africa: Steps, Tips, and Requirements here!
Government Assistance and Bursaries
Government loans and other financial assistance are designed to promote equality in education. The primary purpose is to make it possible for academically deserving students from lower-income households to pursue higher education.
These loans usually carry a lower interest rate, and payments begin only after students are employed and meet a certain annual income threshold.
In addition to loans, government bursaries are also available to students. Compared to loans, bursaries are financial awards that do not need to be repaid. They can be awarded once or renewed over several years, provided the applicant meets the academic requirements.
Some of the most well-known government assistance programmes in South Africa are:
1. National Student Financial Aid Scheme (NSFAS)
This is a student-centred bursary and loan provider that operates under the Department of Higher Education and Training (DHET). NSFAS awards bursaries to students applying to TVET colleges and offers loans to unemployed students attending public universities in South Africa.
2. Other government programmes
In addition to NSFAS, the Funza Lushaka Bursary Programme is another South African government initiative to promote teaching in public schools. This programme is primarily for students seeking a teaching qualification. Students who are awarded the bursary must teach at a public school for the same number of years as their bursary.
Explore Financial Aid vs. Student Loans: What You Need to Know here!
Alternative Study Financing Options for Unemployed Students
In addition to bursaries and traditional loan routes, it is also possible to apply for student financing through your higher education institution. At Regenesys Education, we believe that every student has a right to education, and while we are not lenders, we offer practical options.
This is how you can finance your studies when you enrol with Regenesys Education:
1. Educational Loan Partnerships
We have partnered with reputed private banks and educational loan providers to simplify the lending process. Students can easily compare loan amounts, interest rates, and repayment plans.
2. Flexi Pay Instalment Plan
We also offer students the option to pay their tuition fees in flexible instalments. This helps to break down the cost of tuition and makes it easier to manage payment.
Explore Our Other Programmes
Conclusion
Student loans help ease the burden of pursuing a higher education programme in South Africa. Applicants can apply to one of the many loan providers who can help cover the cost of tuition, accommodation, and study materials.
Student loans are available for full-time and part-time students. Most student loans for unemployed individuals require a guarantor to sign the application, and the guarantor is responsible for making the monthly payments to the lender.
Each provider has different eligibility criteria, interest rates, and repayment plans. When choosing loans for unemployed students, applicants should research and select a loan that best suits their needs. Check out Regenesys Education for a complete list of our higher education programmes.
FAQs
Can you apply for a student loan if you are unemployed?
Yes, unemployed students can apply for a student loan. However, most lenders require a guarantor – usually a parent or guardian – who agrees to take responsibility for the loan repayments.
What are the student loan requirements?
Requirements vary by provider, but generally include a valid South African ID, proof of acceptance or registration at a recognised institution, and a guarantor with a stable income. Some lenders may also request recent bank statements or proof of residence.
What are the eligibility criteria for student loans with surety?
Students must be South African citizens, accepted into an accredited programme, and the guarantor must meet minimum income requirements.
What documents are needed to apply for a student loan?
Required documents typically include proof of citizenship, an admission letter, proof of residence, and, for loans with surety, documents from the guarantor, such as payslips.
Are there loans for students who are unemployed and do not have a guarantor?
Students can apply for student loans without a surety if they do not have a guarantor to sign the application with them.
What is the National Student Financial Aid Scheme (NSFAS)?
NSFAS provides loans and bursaries to eligible low-income students, allowing them to cover tuition and living expenses.
