Avoid stu­dent loan traps

KEY: WORK WHILE YOU STUDY TO STAY ON TOP OF LOAN RE­PAY­MENTS

The Citizen (KZN) - - Business - Her­man Lom­bard

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

Pic­ture: Shuttersto­ck

UN­LOCK­ING DOORS. Stu­dent loans can rep­re­sent a path to a pros­per­ous fu­ture.

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