Paying for university studies: Student loan 101

There are generous repayment options to help you pay back your student loan (

You've been looking forward to financial freedom forever. But your student loan is weighing in heavy on you. Dr Birgit Schreiber gives tips on how you can cope.

Perhaps you just wrapped up your studies or this year is your final year, and there’s nothing you’ve been looking forward to more than finally ditching the textbooks, detaching yourself from your student card, and finally joining the world of working professionals. Yet, amid the excitement of earning your own income, your student loan is impacting heavily on all your “financial freedom” plans, and making you wonder if getting a degree is even worth it.

Student debt is an ongoing concern in South Africa and has heavy consequences for both students whose university options can be limited, and for universities who feel the student debt pinch.

The stats:

  • According to the 2011/12 National Student Financial Aid Scheme (NSFAS) annual report, about a third of South African students rely on the government student loan and bursary scheme to fund their education;
  • in 2010, over R3 billion was issued in loans and bursaries by the scheme;
  • in 2011, student loans issued rose to over R5 billion in 2011;
  • by 2012, R7 billion was paid out.
  • (These figures excluded loans or bursaries provided by private donors or funders)

    Regardless of the costs involved, it’s been proven that as a soon-to-be-graduate, you stand a better chance of securing a job. Dr Birgit Schreiber from the Centre for Student Support Services at the University of Western Cape agrees. “Students should embrace all funding they can get - it often secures employment after their studies,” she says.

    A study released by the Centre for Higher Education Transformation supports this notion as well. The study found that in addition to enhancing their chances of employment, students who furthered their studies were also more likely to move on to better paying positions.

    Further studies conducted in 2009 by the Southern Africa Labour and Development Research Unit showed a steady increase in income from the time students completed their matric to getting a degree. At the time, a student with an average matric received R1100 per month which increased to R3100 per month with an average diploma or certificate. With an average degree, the income earned per month increased to R5400.

    Read: Minimum wage in South Africa: How your income compares

    Repayment terms can be affordable

    Like with all government grant-loan schemes, NSFAS experiences student loan repayment challenges. However, ditching your studies because you’re concerned about paying back your student loan is not an option. “Many students who leave university without [completing their studies] usually struggle to repay as they often struggle with employment,” says Dr Schreiber.

    Student loan repayment conditions are usually very generous, she adds. “Even bank loans are paid back at very affordable rates and only when the person earns at a particular level.” Better still, your loan can be turned into a grant if your performance is good.

    CSI in South Africa promotes education

    Corporates across the country are also willing to spend loads to support of your educational needs. “Our Corporate Social Investment is beyond the prescribed 1% - we are on 1,4 %, meaning that corporates are determined to support social investment,” Dr Schreiber asserts. In fact, 40% of the country’s CSI initiatives go toward education.

    A student loan is a great way to finance your studies and land you a job after you graduate. And with generous repayment plans, there’s no need to worry about how you’re going to make it after varsity.