5 things to consider when taking out a student loan
The cost of education at tertiary level makes it difficult for those without the cash to get an academic qualification. Fortunately, there are options available to help finance your studies such as the Standard Bank Student Loan. Before taking out a Student Loan, however, it is important for young adults and parents alike to understand the consequences of the financial commitment and ensure that it is managed prudently.
“Nobody wants to start their working lives with debt hanging over their head,” says Magdeline Thidiela of Standard Bank. “But the reality is that tertiary education in South Africa is expensive, and many young adults will need to explore financial help available to them. The cost of foregoing those studies could be far greater than the cost of the loan itself.”
Thidiela adds: “Ultimately, you don’t want to forego the opportunity to study. A loan may seem daunting now, but it can bring rewards later in life such as entry into a professional career that earns a good income. Those with a tertiary degree typically end up increasing the amount they can earn than those who don’t when considering the formal employment sector.”
There are various student loans available that are offered by financial institutions to assist students who may be unable to access financial aid through the university or via a bursary or scholarship.
“Before taking out a loan, consider all options available to you. If you are able to get financial aid such as a bursary or scholarship, you may only need to take out a smaller loan to cover the potential shortfall” explains Magdeline Thidiela.
Many financial institutions offer student loans as an aid to assist students who fall short on having enough cash to pay for their studies. However, before a student approaches an institution, they need to know exactly how the loan is structured, and what this means for your finances later down the line.
To get you started, here are five tips to help you make the process much easier:
Don’t sweat it!
Loans usually have negative feelings attached to them, which they shouldn’t if they are used for the right reasons. Just like taking out a home loan, student loans fall into those ‘good loan’ options. So, don’t worry too much about getting yourself into debt because studying will secure your future forever.
Whenever you embark on a new adventure, it’s best to get as much information as possible. Same as looking into a loan, make sure you do your research to ensure that you get the best loan provider that offers you money for everything you’ll need – including fees, textbooks and accommodation. Also, make sure that you have all the required documentation you need.
Compare interest rates
Every loan comes with its interest rates, and this is all dependent on your personal profile. Look for interest rates that will suit your needs. Remember that the higher the interest rates, the more your loan repayment will be.
Get a surety
Before getting approved for a Student Loan, you will need to have a surety who will be equally responsible for your debt. Speak to somebody you can trust who will be your surety for instances where you are not able to pay back your loan. It’s best to speak to family, but if there is somebody else who can assist you outside of your family, go ahead and ask them.
Prepare yourself to pay it back
When living as a student, always remember that you have a loan that you need to pay back. So, ensure that you refrain from living beyond your means, and avoid taking on other debt, especially unnecessary debt. These will make it difficult for you to pay back your loan as quickly as possible.
“It’s important to remember that a Student Loan is not a bad loan. It is there to help you fulfil your dreams. So, go ahead and consider your options so that you can get a head start of the new year,” concludes Magdeline Thidiela.