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NSFAS Student Loan Is Better Than Personal Loan: Expert Speaks On Tertiary Funding



NSFAS Student Loan Is Better Than Personal Loan: Expert Speaks On Tertiary Funding

NSFAS Student Loan Is Better Than Personal Loan: Expert Speaks On Tertiary Funding. Navigating the financial challenges of tertiary education is a daunting task for many South African families. With the burden of registration fees, tuition costs, and accommodation expenses, the quest for funding often leads individuals to consider loans as a viable option.

Plight of Tertiary Education Financing

The landscape of tertiary education financing in South Africa is riddled with challenges, as evidenced by movements such as Fees Must Fall. While students from low-income households can seek relief from the National Student Financial Aid Scheme (NSFAS), a significant segment known as the ‘missing middle’ often struggles to secure adequate funding. This group, with annual incomes ranging from R350,000 to R600,000, finds itself in a precarious position—deemed ineligible for government assistance yet unable to afford tertiary education expenses independently.

Student Loan: A Viable Solution

Ayanda Ndimande, Strategic Business Development Manager for Retail Credit at Sanlam, advocates for student loans as a superior alternative to personal loans for financing tertiary education. She emphasizes the structured nature of student loans, wherein a guarantor, typically a parent or guardian, stands surety during the student’s academic tenure, resulting in minimal premiums.

Upon graduation, the loan is transferred to the student, with premiums adjusted accordingly. Ndimande highlights the potential for graduates to negotiate loan settlements with prospective employers, offering years of service in exchange for debt alleviation.

Personal Loan Pitfalls

In contrast, personal loans present a less favorable option due to their inherently high premiums and lack of guarantors. As Ndimande elucidates, personal loans necessitate hefty premiums from the outset, making them financially burdensome, especially for students. Moreover, the absence of a guarantor complicates the loan acquisition process, further exacerbating the financial strain on borrowers.

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Hope on the Horizon

Amidst these financial tribulations, the Department of Higher Education has introduced the Missing-Middle Loan Scheme, offering a ray of hope for students within the income bracket of R350,000 to R600,000. This initiative aims to bridge the gap for individuals pursuing tertiary education at TVET colleges or public universities. However, prospective beneficiaries must meet specific criteria, including signing a loan agreement upon approval.


In the pursuit of tertiary education funding, the choice between student loans and personal loans holds significant implications for individuals and their families. As expert insights suggest, the structured nature and potential benefits of student loans make them a preferable option over personal loans.

With initiatives like the Missing-Middle Loan Scheme on the horizon, there is optimism for alleviating the financial burden on aspiring students within the ‘missing middle’ income bracket. Ultimately, informed decision-making and strategic financial planning are imperative to navigate the complexities of tertiary education financing in South Africa.

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