Study loans from South African banks
If your application for NSFAS/GAP Funding was unsuccessful, do not lose hope. You still have quite a few options – they require more commitment than your university’s funding scheme but they’re options nonetheless.
What is a study loan?
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.
Now if you’re like me, the thought of committing to a student loan is enough to send you running for the hills. But let’s weigh our pros and cons and find the light at the end of the tunnel. I promise you that it’s there.
Financial institutions promote student loans for a number of reasons but the main two being because a) they love to see young people achieve their dreams – we are after all “the faces of tomorrow” and b) you will have pledged your allegiance to them so yay! More clients for them.
I will be looking at the four most popular banks in South Africa in order to provide the majority, if not all, of the options available i.e. ABSA, Standard Bank (SB), FNB, Nedbank.
Who can apply?
All four banks allow for any full time or part time student to apply. You will have to be registered at either a public institution (UWC for example) or at a private institution e.g. AAA or Vega.
What does the loan cover?
Accommodation (Both residence fees or private accommodation will be covered by the loan)
Equipment fees (ABSA will offer you a discount of up to 15% on study-related equipment if you need it)
*Equipment fees are allocated when you are doing a practical program i.e. engineering. It will cover costs for tools and materials that you might need.
Campus accommodation – unlike ABSA, FNB only covers on-campus accommodation.
How does the repayment work?
You are able to start paying capital and interest repayments as soon as your loan is approved.
You are given the option to only repay the interest for a period of 12 months, but after that repayments will include capital and interest.
When ‘topping up’ an existing study loan, you may repay interest for a further 12 months only
If you are a full-time student, you will only need to start repaying your loan on completion of your studies.
During your time of study, your *surety will need to pay the monthly interest and service fees. The payments will be charged to your surety's bank account.
*What is a surety? A surety is someone with a stable income who the bank can hold accountable if you are unable to meet your repayments. It’s collateral in a sense. You will be granted a grace period for capital repayments after you have completed your studies and have not found employment. The grace period may be extended if you have to complete your articles, internship or community service.
You will only start repaying after you have completed your studies. However, while studying, you are required to pay back the interest.
Nedbank has the same policy as the previous three. Capital repayments begin after you have graduated but interest is paid while you are studying.
What do I need when applying?
You need to earn a monthly income of minimum R3 000 per month
You will be approved based on your affordability and risk profile
Proof of income
Proof of study in the form of a final letter of acceptance or proof of registration the institution.
Proof of course costs for the year of study
You need to be registered at an accredited tertiary institution and be studying towards:
- a certificate
- a diploma;
- a degree
- a postgraduate degree or diploma
In order to be considered for a Student Loan, you need to provide academic results showing that you have passed your previous year of study. Outstanding fees owing to your academic institution cannot be financed by a Student Loan therefore you must apply before starting your course.
You will need to have someone who can sigh as surety for you.
When you complete your online application, you will receive an instant response. If your loan is provisionally approved then you will need to take the following docs to your branch –
Please click here for list of required documents.
A copy of the applicant's SA green bar-coded ID or Smart Card ID
Proof of residence not older than 3 months
Proof of enrolment from the educational institution
If you do not bank with FNB, your latest 3 months bank stamped statements reflecting 3 months’ salary deposits.
If you are self-employed, the latest 6 months bank stamped statements, Personal Tax assessment (ITA34) and your latest business financials.
Matric results/Last academic results
Proof of registration from the institution where you are studying
Proof of earnings or latest payslip
Proof of current residential address (FICA)
Three months' bank statements (non-Nedbank clients)
Income and expenditure statement
Invoice of fees owed from tertiary institution
Invoice of other study-related costs (if applicable)
Cohabitation form obtained from a branch (FICA)
Proof of life insurance cover in case of death or disability (can be arranged through Nedbank or clients can provide their own)
Marital status declaration
After wading through that, I am sure it feels like you need an arm and a leg in order to qualify for a student loan but fear not – it is not as daunting as it seems.
The best option, if you are considering a student loan, would be to go to the bank of your choice and chat to a consultant about what would be the best fit for you.
Interest rates vary according to your profile and so does the capital you receive and that is something that only you can find out. As much as I would like to provide you with all of the information, I am unfortunately not a financial advisor and my knowledge (and Google) only allows me to share so much with you.
Below, I have attached web links for your perusal if you would like to do further reading. Again, I hope this has been helpful and has not caused you to throw in the towel on your quest for funding.