Debt Management for students
Studying can be a costly activity. As a student you can expect paying between R25 000 and R35 000 a year studying as an undergraduate at any of South Africa’s universities. Studying through private institutions you can look at paying almost R50 000 for select courses.
Depending on what background you come from, more so than ever students are reliant on loans to pay off these heavy tuition fees. Universities nationwide are concerned about the millions of rands that are owed each year. This excludes the R300 million that the government ensures is available for impoverished students through NSFAS. Students who apply for a NSFAS Loan are usually granted 60% of their loan as a bursary based on their final academic records for the year. However students who do not perform academically well including exclusions to come back the following year are left in debt.(see NSFAS STUDENT LOANS)
The University of Cape Town for the first time this year had to turn away academically qualified applicants who could not afford tuition. It was widely reported that the communications director, Gerda Kruger UCT’s Executive Director of Communications & Marketing said that institutions had been warned by the present government for years that the situation was flawed and difficult decisions had to be made.
Nearly all universities award bursaries to students that have performed extremely well in art, music or on the sports field. {Please enquire with your university’s financial aid office whether you are eligible for any of these bursaries or awards}
For most students starting or leaving university or college marks the beginning of financial independence but this poses a real problem when it comes to student loans. When taking out student loan we don’t ever consider repayments, interest rates or the different loan programs that are available. The increase in debt has corresponded with the ease of access to credit for students who can now acquire credit cards as long as they can provide evidence that they receive a steady income/allowance of as little as R200 a month from a parent or a guardian STUDENT ACHIEVER ACCOUNT. Over-indebtedness amongst youth groups is mostly due to the readily available unsecured loans from banks and credit from retail stores rather than specifically to the creation of credit cards.
Here are a few tips that can be used as a guide to avoid making money mistakes that can have painful consequences for years or even decades.
You should only look at student loans after doing some thorough research and considering other financial aid providers including bursaries, scholarships or companies that offer work-study programmes.
Create a budget- it’s not a cliché or your grand-parents method of saving money, it really works. List your income, salary or wages, any earnings and expenses to ascertain how much you need to borrow and can realistically pay.
Know your repayments terms-All loans have repayment terms. The loan has to be repaid even if you did not complete the course or can’t find a job in your chosen field of study. Create good credit history by paying your loan on time. Paying the minimum will only hurt your credit history. When you make the minimum payment, you end up paying more money in charges . You could save hundreds in interest by increasing your monthly credit card payments.It’s always best to pay a fee that higher than the minimum but smaller than the balance. Communicate with your loan provider at all times. Inform them about changes in your life; work or change of contact details. You might need them to show leniency should you require altering or suspending your repayments
Only take into account private loans as a last resort before making a final decision.* A private student loan is a loan that will pay for your education. It is offered through a bank or another lending institution.
According to the National Credit Regulator; lending money to the youth is permissible as long as it falls in line with the National Credit Act.(see National Credit Act.pdf ) The student credit cards are said to be only offered to students who are registered full-time at an accredited institution and who are already clients with those banks(see Reckless lending is catching up with the youth.)
Please visit the following websites for lists of bursary info. www.nrf.ac.za the Department of Science and Technology’s science council sa.gostudy.info -lists bursaries according to field of study and value http://www.hcifoundation.co.za/bursary
When it comes to debt there is never a quick fix solution to getting out of debt. “Interest on debts grows without rain.” -Yiddish Proverb
Written by Olwethu Moss