Dealing with student loans can be stressful, especially when you’re fresh out of school and just starting your career.
Whether you’re still studying or have recently graduated, managing your student loan debt is key to staying financially secure.
Here’s a simple guide to help you get started, tailored to South African students but useful to anyone with student debt.
1. Know What You Owe
The first step in managing your student loan is understanding how much you owe and to whom. In South Africa, most students take out loans from the National Student Financial Aid Scheme (NSFAS), private banks like Standard Bank, Nedbank, or from Eduloan (now Fundi).
- Make a list of your loans, including the lender, total amount, and interest rates.
- This will help you get a clear picture of your debt.
2. Understand Your Repayment Terms
Each loan has its own repayment terms.
ALSO READ: Scholarships vs. Student Loans: Which One is Right for You?
NSFAS, for example, only requires you to start repaying your loan once you’re employed and earning above a certain threshold.
Private banks may have different rules.
- Check the grace period: This is the time you have after finishing your studies before you need to start making payments.
- Understand the interest rates: Higher interest rates mean your debt will grow faster, so it’s important to know how much you’re paying in interest each month.
3. Budget for Your Loan Repayments
Creating a budget will help you manage your monthly expenses and avoid falling behind on your loan repayments. Here’s how to get started:
- Track your income and expenses: Write down your monthly earnings and all your necessary expenses (rent, food, transport). Set aside a portion for your loan repayment.
- Prioritize your debt: Make loan repayments one of your top financial priorities. Paying on time helps avoid extra interest and fees.
4. Start Paying Early, If You Can
Even if your loan doesn’t require immediate payments (like NSFAS), it’s a good idea to start paying a little each month if possible.
By doing this, you reduce the total interest that builds up over time.
- Make small payments while studying: If you can, start by paying interest or a small amount each month while you’re still in school. It may seem like a small effort, but it makes a big difference.
5. Explore Loan Forgiveness or Deferment Options
If you’re struggling to make payments, don’t panic.
Many lenders, including NSFAS, offer options for deferment (delaying your payments) or even loan forgiveness if you work in certain sectors or fields.
- Check if you qualify: NSFAS offers loan forgiveness if you graduate and work in the public service for a specific period. Other lenders may have similar options, so it’s worth exploring.
6. Communicate with Your Lender
If you’re having trouble making payments, it’s important to communicate with your lender right away.
Avoiding the problem can lead to penalties and added stress.
- Ask for help: Many lenders offer repayment plans that adjust according to your income, making it easier to manage during tough financial times.
7. Stay on Top of Your Payments
It’s easy to lose track of things, especially when life gets busy.
To avoid missing payments:
- Set up automatic payments: Most banks and NSFAS allow you to set up debit orders, so your loan is automatically paid each month.
- Use reminders: You can set calendar reminders or use budgeting apps to alert you when payments are due.
8. Plan for the Future
Managing your student loan is a long-term process.
To make it easier, keep your future goals in mind.
- Set savings goals: Even while paying off your loan, try to set aside money for emergencies or future financial goals, like buying a car or traveling.
- Stay positive: Repaying student debt takes time, but with a good plan, you can manage it successfully without it controlling your life.
Final Thoughts
Managing your student loan debt doesn’t have to be overwhelming. By understanding your loans, setting a budget, and staying on top of your payments, you’ll be able to handle your debt effectively.
If you ever feel stuck, don’t hesitate to reach out for help, whether it’s from your lender, a financial advisor, or even your parents.
You’ve worked hard to get your education, and with a little planning, you can handle your debt and build a strong financial future.
If you’re a student in South Africa, this guide applies to most student loan providers, but always check with your specific lender for the most accurate details.
