Yolandi Kruger, National Director of Business Development, CTU Training Solutions.
According to Johan Wiggins, CEO and co-founder of Student Hero, there are several reasons why it might be better for students to consider funding their investment in education, rather than paying cash up front.
“The main reason for funding your education would be that it allows you to save your savings for a rainy day, while using the resources of a funding provider to pay for the educational institution. If you must apply for financing out of necessity, the extended repayment term associated with the financing can significantly reduce the monthly payment in accordance with what is comfortable for your particular financial situation.
However, finding funding for your studies is not even necessarily out of necessity. It might just be more comfortable for a person to pay a lower installment to avoid sacrificing too much of their comfort. “We’ve all heard the stories of students surviving on noodles and bread for two minutes. This does not necessarily have to be the case with all the financing options available today.
To determine if funding is the right option for the student’s situation, Wiggins recommends weighing the costs associated with funding or funding their education against the increased earning potential induced by the education. “Whatever the reason, it is important that the student knows their options and understands the eligibility criteria, conditions and costs associated with different education funding providers.”
Student finance differs from other financial products like real estate and auto finance, and has different cost implications. Wiggins explains, “Education funding providers appreciate how important it is to invest in education, and this is reflected in the way student funding is priced and reimbursed.
Student financing is priced at an interest rate ranging from prime to prime plus seven, which is a relatively low interest rate compared to other financial products. However, the most unique feature of student financing is that the repayment of the principal amount requested may, in some cases, be deferred until the student completes his studies.
“This repayment structure gives the student time to start earning income before starting with principal repayments,” he says. “Student finance is the most affordable type of finance offered by South African finance providers. ”
There are, however, certain eligibility criteria for obtaining student funding.
A finance provider will look at two things in determining whether an applicant is eligible for funding: these are the applicant’s affordability and their credit rating. Simply put, the provider will want to establish that an applicant can afford the monthly funding installments.
Affordability is calculated by deducting fixed expenses, such as rent, insurance premiums, and other credit commitments from your net income. The surplus must be greater than the financial tranche.
“Funders also factor in your additional income, such as commission, bonus, or rental income, and even allow you to add income from a second sponsor as part of the affordability calculation. . For this reason, it is important to inform the finance provider of the availability of additional income or a second family income.
He points out that a perfect credit score is not necessarily required to be eligible for education funding. “Different suppliers each have a unique qualification criterion, some more flexible than others. “
Students who are unsure of their credit rating or affordability should contact an education finance provider for prequalification, after which they can assess your options. Wiggins says, “The most important thing to keep in mind for first-time students or their financial caregivers is that the student does not need to be an enrolled student before committing to a provider. education funding. “
Most providers offer free advice to students who want to apply for funding for the balance of their current fees or to fund additional years of study, but are unsure whether or not they can apply for funding.
“Students who wish to apply for funding for their studies – or find out if they are eligible – can ask their student advisor for help or apply through our website,” says Yolandi Kruger, National Business Development Manager at CTU Training. Solutions.