Throughout the last two peak seasons, First National Bank (FNB) has reported an increase in demand for student loans between December and March, annually.
According to Amika Maharaj, business solutions head – FNB Retail Loans, in order to qualify for a student loan at FNB, the principal debtor (applicant) needs to earn a minimum income of R3 000 a month.
“Should the individual be a part-time student or be employed full time with the goal of furthering their studies, they are able to apply for the loan as the principal debtor (given that they meet the R3 000 minimum income requirement). All applications are subject to a credit and affordability assessment.”
Student loan interest rates are generally lower than other unsecured lending products such as credit cards or personal loans. The interest rates are based on the principal debtor’s credit profile and FNB Student Loan interest rates starts from as low as prime less 0.5%, which equates to 7% – based on the current prime interest rate.
The average FNB loan size granted per year per student is approximately R100 000 and this covers expenses such as tuition fees, accommodation, textbooks and other study-related expenses. The principal debtor enjoys the benefit of paying only interest and fees for a 12-month period, and the repayment due after that consists of interest, fees and capital.
“It’s important to understand all options that could be used to fund studies and explore whether these options are viable before applying for credit. For example, does the student qualify for NSFAS (the National Student Financial Aid Scheme), a bursary or is there a sponsor who would be willing to fund the student’s education? Alternatively, are there any savings available that could be used to fund the student’s education?
“If these options are not viable, then applying for a student loan is the next best thing. Once the loan is paid to the customer’s account, ensure that repayments are made on time and pay in extra money where possible to save on interest and fees and decrease the total cost of credit.
“There are zero penalty fees for settling the loan early. Also remember that if additional funding is required for the next year of study, a new application needs to be submitted. So, only borrow the amount that you need and keep expenses low, together with a healthy credit profile, to ensure that future funding that can be attained,” says Maharaj.
IOL