MyMoney Online

A weak economy puts student loans at risk…..

Recently I came across a very disillusioned sponsor of a student loan who had been paying interest and service charges for 18 months and the outstanding loan was still the same as the original amount.

The banks cover themselves from left right and center with this type of loan. Whilst it is the only way many students can afford to pay for their education the loan is loaded in favour of the bank all the way. The risk is all yours.

You take the loan for the duration of your studies and reapply on an annual basis providing the bank with your marks annually when you reapply. You elect a sponsor on application who commits to paying the interest and service charges from the beginning of the loan until you finish your studies. This means that the original amount of the loan is still owed when you finish.

This is no loss to the bank as the cost of borrowing has been paid for and some….as the current rate of interest is 20,5%!!!!

You will be granted a grace period for capital repayments after you have completed your studies and have not found employment. The grace period may be extended if you have to complete your articles, internship or community service.

The reality for many students is that there is a huge risk of not being able to find employment after completing your studies. The local and global economy is under huge stress and growth is not happening. This translates into rising unemployment which has a large component of youth.

Starting off in your career with a huge high interest bearing debt is not ideal especially if you cannot find a job to pay it off. The banks have it covered by either you or your sponsor. A huge obligation on you in the face of tough times ahead.

Listen to the audio below for more information

Read more from Paul Roelofse at www.investforlife.co.za


Recommended

by NEWSROOM AI
Read More
Prescribed assets: 'Are unions sleeping? Why are they not protecting members?'

Prescribed assets: 'Are unions sleeping? Why are they not protecting members?'

The ANC is eyeing your pension. Bruce Whitfield interviews Warren Ingram, a personal financial advisor at Galileo Capital.

3 best local and offshore shares to buy in January 2019 (by Cratos Capital)

3 best local and offshore shares to buy in January 2019 (by Cratos Capital)

Ron Klipin, a Senior Analyst at Cratos Capital, shares his stock picks of the week.

ANC to investigate using your pension fund to save Eskom, protect its monopoly

ANC to investigate using your pension fund to save Eskom, protect its monopoly

The Money Show's Bruce Whitfield interviews Albert Botha, Head of Fixed Income Portfolio Management at Ashburton Investment.

6 tips for making money when investing in 2019

6 tips for making money when investing in 2019

Ray White interviews Warren Ingram, a financial adviser at Galileo Capital.

3 best JSE shares to buy at the start of 2019

3 best JSE shares to buy at the start of 2019

Ray White asks Nadir Thokan, an Investment Analyst at 27 Four Investments, to share his stock picks of the week.

Drowning in debt? How to break free (while paying lower monthly instalments)

Drowning in debt? How to break free (while paying lower monthly instalments)

It’s a new year and time for a fresh financial start. Ray White interviews Neil Roets, CEO at Debt Rescue.

Popular articles
Zondo commission's secretary implicated in Bosasa scandal - report

Zondo commission's secretary implicated in Bosasa scandal - report

Eusebius McKaiser spoke to investigative journalist at News24 Kyle Cowan on the latest developments in the inquiry.

Eusebius: 'We are living in a worse nightmare than we thought'

Eusebius: 'We are living in a worse nightmare than we thought'

Eusebius McKaiser shares his views on the former COO at Bosasa, Angelo Agrizz's testimony at the Zondo Commission.

Transnet receives R6.18 billion back from Chinese rail firm

Transnet receives R6.18 billion back from Chinese rail firm

Investigative Journalist at Amabhungane Susan Comrie says the advance payment was from a totally different contract.

Should Zimbabwe officially join South Africa in a monetary union?

Should Zimbabwe officially join South Africa in a monetary union?

What will happen to the rand if it does? Bruce Whitfield interviews Tim Nhamo, a currency specialist at Ironhead Trading.

South Africans are getting poorer and poorer

South Africans are getting poorer and poorer

It's not your imagination; we’ve lost a decade. Bruce Whitfield interviews Johann van Tonder, a researcher at Momentum.

No more swiping without sweating! Discovery Vitality introduces new swipe system

No more swiping without sweating! Discovery Vitality introduces new swipe system

The health programme piloted a new tag system at the exit points in a bid to crack down on fake gym visits at a few fitness clubs.

[WATCH] Baby hilariously tries to eat mom's burritos

[WATCH] Baby hilariously tries to eat mom's burritos

Khabazela shares tweets and Facebook posts that have gone viral.

'I thought he was going to rape me' - Ellen Pakkies on killing drug addict son

'I thought he was going to rape me' - Ellen Pakkies on killing drug addict son

'Ellen' The Ellen Pakkies Story, premiers in cinemas on Friday.