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