A student loan is money borrowed from the bank or government institution to finance higher education studies.
If you cannot afford the college or university fees from your pocket, then a student loan may be your next best solution.
This type of personal loan is designed for potential students looking to study further and better their lives.
Let's get started.
Why Take Out A Loan?
The costs of studying at a higher institution can be so expensive, depending on the course you'd pursue.
That's not all. On top of the tuition fees, you'd still need to find accommodation, buy stationery and food for the period you're going to spend at the university or college.
So all these costs can be a bit heavy on the pockets and budget for many families, though studying is very significant for your success.
Taking the student loan will assist in managing the costs and reducing the financial stress off your shoulder.
It's a big decision to make because it comes with the costs in the end.
How to Qualify for a Student Loan?
Of course, you're not working so how would you qualify for the loan.
Student loans are types of loans popularly referred to as secured loans. You'll qualify for the loan by a surety, parent, or guardian with monthly income.
Your student loan surety must have a good credit score, to qualify for the loan. Unfortunately, if your parent has bad credit, student loan providers may not be able to assist you with the necessary finances.
The following documents will be required in the application:
- Proof of acceptance at university/college
- Parent/Guardian's ID
- Proof of income
- Proof of address
Though the loan will be in the student's name and the parent/guardian will ensure the student loan is paid back in full at the end.
While you're still studying, your surety will be paying the interest charged on the loan for you to take over the principal debt once graduated and working.
How Much Can You Qualify For?
Depending on the parent's credit history, you'll qualify for the maximum amount of the fees at a university or college.
Since the idea is for your parent or surety to only pay for the interest rate, it should affect how much student loan you can qualify for.
The loan belongs to a student, who doesn't work. So you're likely to qualify for the full amount to cover all the costs of studying at any institution of your choice.
Where's the Money Paid?
Once approved for the loan, the funds will be paid directly into the institution you'll be enrolling with.
Because these are student loans and not necessarily personal loans. So they're not for personal use, hence the money isn't deposited in your bank account.
If the loan issuer is paying for accommodation too, they deposit the funds directly into the owner's bank account.
Of course, some of the funds will be available to you to spend on your stationery and food, if approved for those features as well.
Alternative to Student Loans
Though student loans are designed to help students study further, sometimes it's worth shopping around for a better credit solution.
Say, for example, you're studying at a college and the costs are less than R20,000.00 in one year. You could first try to negotiate with the institution to pay the fees in installments, which will not be charged interests.
Secondly, you can look at paying the study costs with your credit card. Perhaps you have a credit card with a low interest rate, it can be the best alternative to student loans.
Lastly, there are over 8500 registered credit providers in South Africa. You could try a personal loan, with a low-interest rate compared to costs on the student loan.