Education is the one of the tools that help to end inequality in society.  South African students from poor households still battle to pay for their tertiary education even after the Fees Must Fall movement.  Lethabo Ngale, Operations Manager at Alexander Forbes Financial Well-Being looks at what to do as a student and as a parent when you cannot afford tertiary fees.

Tips on structuring university fees and debt

Apply for the National Student Financial Aid Scheme (NSFAS). This option is available for people whose household income does not exceed R350 000 per annum, or if you are a social grant beneficiary. It covers tuition, accommodation, meals and stationery.

If your household falls into the middle class category and doesn’t qualify for NSFAS, apply for a student loan with a financial institution. The banks structure the financing differently, however the most common practice is for the sponsor, usually the parent, to pay monthly instalments towards interest and administration fees immediately after the loan is granted, and for the student to pay the capital loaned once they finish their studies.

Secure a part time job – whether you become a waiter or school holidays teller, the income you make out of the job may help your sponsor to pay the monthly instalments towards your student loan, or cover other expenses you may have during your student years. The best way to ensure your part time income takes care of important expenses is to draw up a budget, avoid debt such as clothing accounts and live within your means.

How to pay off your student debt:

 The reality of job shortages for graduates cannot be ignored, so if you are struggling to find employment, let your creditors know. It is important to keep them informed of your employment status so that you can explore repayment options available to you should you not have an income.

If you we funded by the NSFAS, ensure you contact them as soon as you secure your first job to agree on repayment terms. The NSFAS repayment structure is centred on how much you earn, and you are required to pay 8% of your annual salary, if the salary exceeds R59 300 per annum. The last thing you want is for the repayments to harm your pocket. The longer you take not repaying your student loan, the more interest you are charged. Paying off your NSFAS loan helps government to fund other students.

If you were funded by any other financial institution, the capital owed will then become debt in your name. The bank will discuss repayment options with you.

Work on a budget, your student loan should be an item on your list of liabilities. Structure your budget in a way that it accommodates monthly repayments. Don’t rush to financially commit yourself to more debt if you are still struggling to live month-to-month on your salary – being debt free should be on your list of priorities.

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