Thinking of getting a student loan? Financial expert urges careful planning

As thousands of pupils await their matric results and confirmation of financial support from the National Student Financial Aid Scheme (NSFAS), attention is turning to student loans as an alternative for those who do not qualify.

According to financial institutions, demand typically rises at this time as families scramble to secure funding before the academic year begins.

Thabo Hollo of Old Mutual says student loans generally come with more favourable interest rates than personal loans but warns that borrowers often take more than they need.

"Take exactly what you need, not any more, not any less. Remember, you still have to repay. You don't want to find yourself in a situation where you are over-indebted or unnecessarily indebted because you've taken a study loan and you funded your lifestyle instead of just funding your studies.

"Stick to a particular limit. It's not a bursary."

Hollo also cautions that repayment structures differ widely between institutions.

While some loans suspend repayment until graduation, many private banks require interest payments during the study period.

He urges families to shop around, compare terms and understand repayment obligations before committing to a loan.

"It's not a feeling. Look at the pricing. Look at the structure.

"Shop around for a better rate, for better terms and conditions, and please do compare the financial institutions before you sign up for a loan."

To listen to Hollo in conversation with 702 and CapeTalk's Africa Melane, use the audio player below: