PUTTING MONEY AWAY IN AN EX­CHANGE TRADED FUND FROM THE DAY YOUR CHILD IS BORN IS YOUR BEST STRAT­EGY

GOV­ERN­MENT LOAN SCHEME

Weekend Argus (Saturday Edition) - - GOODPOSTER -

The Na­tional Stu­dent Fi­nan­cial Aid Scheme (NSFAS) is a gov­ern­ment scheme that pro­vides loans and bur­saries to stu­dents at uni­ver­si­ties and pub­lic col­leges (known as Fur­ther Ed­u­ca­tion and Train­ing, or FET, in­sti­tu­tions).

This year, the scheme pro­vided about R8.2 bil­lion in loans and bur­saries to more than 450 000 stu­dents at FET col­leges and uni­ver­si­ties, Lauren Vana­core, com­mu­ni­ca­tions man­ager at the NSFAS, says.

To be el­i­gi­ble for a loan or bur­sary, a stu­dent must pass a means test, but Vana­core could not pro­vide de­tails about the test.

Ac­cord­ing to the NSFAS’s web­site, stu­dents do not have to pro­vide guar­an­tees or sureties from par­ents or guardians.

In­ter­est is charged on out­stand­ing bal­ances at 80 per­cent of the repo rate (the rate at which the Re­serve Bank lends to com­mer­cial banks), which is cur­rently five per­cent. This is far less than the in­ter­est rates charged by banks that of­fer stu­dent loans.

The re­pay­ment terms are favourable, be­cause the debtor starts to pay back the loan only once he or she has a job and earns R30 000 or more a year. Re­pay­ments start at three per­cent of an­nual salary, in­creas­ing to a max­i­mum of eight per­cent a year when the debtor’s salary reaches R59 300 a year. This means that some­one who earns R59 300 a year will pay back R4 744 a year, or R696 a month.

Stu­dents can have up to 40 per­cent of their loan con­verted into a bur­sary, which is not re­payable, if they pass all their cour­ses.

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