What You Need to Know About Your Student Loan

Q&A with Eduloan’s Financial Guru

Whether you have your heart set on a certificate, diploma or degree at one of South Africa’s finest tertiary institutions or whether you want to further your education while working, an Eduloan study loan will help you unlock your potential.

It might be a good idea to establish some basic facts about a study loan before you dive into your studies. We chat to Eduloan’s Chief Financial Officer, David Scholtz, who explains the ins-and-outs of your student loan:

Q: What are the benefits of committing to a study loan with Eduloan?

Your study loan is made to your affordability criteria, ensuring you never feel the pressures of being overburdened.  Registration fees, outstanding study fees and other additional costs associated with your studies are covered by our study loans - all you have to worry about is achieving your educational goals. Whether you are looking to increase your salary through improved qualifications, qualify for a better job position or just for personal enrichment, Eduloan will be your partner for your educational journey.
You don't need to put down a deposit and we pay the amount you owe for your studies directly to the institution and then deduct the instalments from your salary or bank account each month, which means no admin for you. Finally, you get repayment periods of 6 to 24 months.

Q: What do I need to apply for a study loan?

Applying to Eduloan is easy! If you are not full time employed, anyone who is can sponsor you. You will need to complete and sign our loan application form (you can download this information from our website) and include the following documents:

• a quotation from the educational institution reflecting your name and student number, the study program, the balance outstanding (if applicable);
• a certified copy of your South African Identity Document;
• you or your sponsor's pay slip (not older than 3 months);
• you or your sponsor's bank statements for the last 3 months. If you or your sponsor are self-employed, we require you or your sponsor's business bank statements for the last 6 months and proof of business ownership as well as you or your sponsor’s certified ID and a quote from the institution.

Once you have compiled all of your document and completed the application form, you can apply online, visit your Eduloan office on campus or giving us a call on 0860 55 55 44.

Q: How do I know how much I can afford?

Eduloan will do an affordability assessment by using the income and expenditure information provided on your loan application form, and by looking at your accounts on the Credit Bureau and a register called the National Loans Register. Based on this, Eduloan will determine whether you can afford the full loan amount you've requested, or alternatively the amount that you would qualify for. Please note that Eduloan will not grant a study loan that is more than the amount that you owe the institution, as the money is paid directly to your account at the educational institution. You can also use our Instalment Calculator as an indication to calculate how much your monthly repayments would be based on your loan requirements.

Q: What if I don’t earn a salary?

If you are not full time employed anyone can apply for a study loan on your behalf, as long as they are in full time employment and provided that the Eduloan monthly instalments does not exceed 25% (based on a one year loan) of your sponsor's monthly basic salary.

Q: What is an interest rate and how is it calculated?

As we all know by now, debt is the amount of money you have to pay back to the person or institution (such as banks or retail stores) from which you borrowed. This amount consists of two parts – the actual borrowed amount, also known as principal debt or capital amount and the interest. Interest is the compensation paid to the person or institutions who lend you the money. It is normally expressed as a percentage of the borrowed amount, e.g. 15% per year. Therefore, it is wise to repay your debt on a monthly basis and not skip payments, as this will significantly reduce the amount of interest you repay at the end of the day. This is relevant to most debt incurred, like credit cards, clothing accounts, car finance etc.

Compound interest occurs when interest is added to the principal debt or capital amount, so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal debt is called compounding. A bank account, for example, may have its interest compounded every year: in this case, an account with R1000 initial principal debt and 20% interest per year would have a balance of R1200 at the end of the first year, R1440 at the end of the second year, and so on.

The effective interest rate is the interest rate on your debt restated from the nominal interest rates as an interest rate with annual compound interest payable in arrears. It is used to compare the annual interest between loans with different compounding terms (daily, monthly, annually, or other). Thus, the quicker you repay your principal debt, the less your effective interest rates will be.

The more diligent you are in repaying your debt, the more controlled the interest on your debt will be. In the end, the sooner you pay off your debt, the less time there will be for the interest to accumulate.

Q: Are there any hidden costs that I should know about?

At Eduloan, there are fixed monthly installments for your study loan which includes an affordable loan origination fee and monthly administration fee, which allows you to budget more effectively. There are no hidden fees and the payment periods are flexible according to your specific needs.

Q: What does my study loan cover?

Your study loan covers a whole lot of student related necessities such as registration fees, books, tool-kits, laptops, tablets and even accommodation for the duration of your studies, as well as your study tuition itself.

Eduloan has solutions for full-time and part-time students and even offer you the opportunity to deduct your fixed monthly repayments from your salary. For more information and to speak to one of our Eduloan consultants, visit our website (www.eduloan.co.za), like our page on Facebook (www.facebook.com/EduloanSA) and follow us on Twitter (@EduloanSA).