How quickly must you repay your student loan?

It can take months to find a suitable job after you graduate, and you may be worried that you won’t be able to repay your student loan on time.  

We find out about the grace periods that student loan providers offer, and we consider how you can successfully service your student debt.  

Tip: You can consolidate your student loan with your other debt to reduce your monthly instalments.

Your repayments may be postponed

Sheila-Ann Robey, financial adviser at Lifeguards, an affiliate of Liberty, says that you generally need to start repaying your student loan once you complete your studies.

“While you are studying, the person standing surety for you – either a parent or guardian – may be required to pay the monthly interest and fees,” says Robey. You may indirectly assist them with this, but the aim is to focus on your studies without having to worry about your student loan. 

Once you complete your studies, however, you will need to start thinking about paying off the loan.

Fortunately, Robey explains, students are often given a grace period in which to repay their loan in full. This allows graduates time to find a steady income before they need to tackle their debt.

Here are some examples of the grace periods that are offered:

• National Student Financial Aid Scheme (NSFAS): You need only start repaying your student loan once you receive an annual salary of R30,000.
• Standard Bank student loan: You have six months post-graduation before you’re required to start paying back your student loan.

Because each loan provider has different requirements and repayment terms, it’s crucial to understand what these are before taking out a student loan, Robey notes.  

Tips to pay off your loan on time

Robey says that, when you apply for a loan, you should read the fine print in your credit agreement. Make sure you understand the options if you default on your loan repayments.

“It’s important to maintain open lines of communication with your credit provider, so that your credit score isn’t tarnished, and you don’t end up with a default judgment against you,” says Robey.

When paying your student loan, consider these tips:

• Get ahead of your repayments. If possible, try to pay more than your minimum monthly instalment. The excess will be noted, and your account will be considered in “negative arrears”. If you have a difficult month, you can request that your provider use this excess to reduce your instalment or skip it for that month. Chat to your provider to find out whether this is possible.
• Consolidate your debt. If you also have other debt, such as credit card debt, you can consolidate this with your student loan debt. This will usually extend the period over which you need to make your repayments. However, it will also reduce your monthly instalments and allow you to pay your accounts with a single payment.
• Be familiar with your cover. Find out more about the credit life cover that may be automatically included in your student loan. In dire circumstances, such as being retrenched or disabled, you will be able to claim under this cover. If you pass away, the cover will also kick in and pay the remainder of your student loan so that your family doesn’t inherit it.

“Your liability toward your student loan should never be ignored. If you’re struggling with this obligation, it may be helpful to schedule a consultation with a trusted financial adviser, who can assist you with budgeting and financial planning,” says Robey.

Get your debt under control by consolidating it – click here.