FNB student loans jump 140% as education costs rise
FNB says it is seeing increased demand for student loans as consumers struggle with the rising cost of living.
The retail banking arm of JSE-listed FirstRand said it disbursed R39.7m in student loans to customers in the six months to end-December 2022, a 140% increase from the R16.54m disbursed in the corresponding period the previous year. The average loan value over that time frame also increased from just less than R80,000 to nearly R90,000.
“The cost of education has increased significantly over the years, making it difficult for many to achieve their educational goals and career aspirations.
“The introduction of student loans on the FNB App has allowed us to provide solutions and help our customers overcome their financial challenges and unlock funds to future-proof themselves in this ever-changing climate,” said Amika Maharaj, business solutions head at FNB Loans.
FNB said its private banking clients, who earn R850,000R1.79m a year, accounted for nearly 43% of its student loan disbursements in the final six months of 2022. The representation of this higher income client segment is probably due to account holders using student loans for family members’ education and their own career development.
FNB’s “Premier ” account holders, who earn R240,000R849,999 a year, accounted for about 27% while “Aspire” account holders, who need to earn a minimum of R84,000 a year, accounted for 16%. To qualify for an FNB student loan the
Amika Maharaj
principal borrower needs to earn a minimum of R3,000 a month.
Should individuals be parttime students or be employed full time with the goal of furthering their studies, they can apply for the loan as the principal debtor, provided they meet the R3,000 minimum income requirement. Alternatively, a parent, family member or any other sponsor can apply for the loan subject to a credit and affordability assessment though they would be liable for the debt.
FNB offers a maximum loan amount of R300,000 annually, with interest rates starting as low as prime less 0.50%.
The loan amount could cover expenses ranging from tuition fees, accommodation, textbooks and any other study-related expenses.
While FNB said it allowed the principal debtor of its student loan facilities to pay off only interest and fees for 12 months, with subsequent repayments comprising interest, fees and capital, it encouraged customers to pay a little extra on top of their agreed monthly repayment on student loans if possible to help reduce the cumulative interest charged over the term of the facility.
“There are zero penalty fees for paying off the student loan early,” Maharaj said. If additional funding is required for the next year of study, a new application should be submitted “so only borrow the amount that you need and keep expenses low with a healthy credit profile”.
THERE ARE ZERO PENALTY FEES FOR PAYING OFF THE STUDENT LOAN EARLY
FNB Loans business solutions head