Avoid student loan traps
KEY: WORK WHILE YOU STUDY TO STAY ON TOP OF LOAN REPAYMENTS
Students need the financial know-how to make wise choices about their finances.
Amid cries for historic student debt to be written off, or at least not affect acquisition of qualifications and academic records, universities are gearing themselves up for a new decade of students.
Many will utilise student loans to finance their studies and as things stand, will be required to repay them.
But are they equipped with adequate financial know-how to make wise financial choices in the process?
Forward-thinking financial institutions have initiated free financial education programmes, which cover the core aspects of personal financial management.
This equips students with strategies to make sensible decisions around further education, to avoid debt and invest wisely in themselves going forward.
For students applying for study loans, this could include researching the available work opportunities and expected income for their chosen field to ascertain whether there is a good chance of earning enough to easily repay the loan.
While a full bursary – typically a full study grant which is repaid in the form of employment by the donor company – is ideal, most students will not qualify for this funding and will be forced to take on a student loan to cover the costs of their studies.
Student loans must be repaid with interest, especially those granted by banks or other financial institutions.
The interest payments start when study begins, but repayments on the actual capital need only commence three to six months after graduating, providing some leeway in which to seek work.
Failure to repay the loan may have a negative effect on your credit rating and could hamper future financial plans.
The government’s National Student Financial Aid Scheme (NSFAS) loans work slightly differently and need only be repaid once you have graduated and secured employment to the value of at least R30 000 per annum.
NSFAS loans are available to those deemed financially disadvantaged as determined by the scheme’s criteria.
All universities have a financial aid office where prospective students can apply for loans, grants, scholarships and bursaries.
Working while you study is a key strategy for staying on top of student loan repayments, the interest of which is comparable to most common debts.
The university itself is the best place to start your search. Consider working as a tutor, librarian, research assistant, campus guide, or dormitory sub-warden.
Also consider positions which interface between the institution and the wider world, such as campus-based brand ambassador, or an internship at an affiliated institution.
Take advantage of your university’s internet connection. Many flexible jobs exist in fields such as teaching, IT and social media, all of which can be done remotely, online.
If this fails, take your search to the community. Working for a small local company will have the added benefit of exposure to the modern business environment, thus providing valuable work-experience.
While student loans can represent a path to a prosperous future, they can also contribute to unnecessary anxiety if students are not adequately equipped to navigate the complex, often unstable economic environment we find ourselves in.
Free financial education initiatives can ensure that prospective students possess the necessary knowledge to make astute choices about bursaries and loans.
Herman Lombard, founder and executive director of African Unity
Student loans must be repaid with interest
UNLOCKING DOORS. Student loans can represent a path to a prosperous future.