‘Higher education strains students financially’

A student loan is considered “good debt”, because it’s an investment in one’s future; however, the loan must be paid back promptly under the loan terms.

A student loan is considered “good debt”, because it’s an investment in one’s future; however, the loan must be paid back promptly under the loan terms.

Published Feb 28, 2024

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The 2024 academic year has recently started, and many students continue to struggle to make ends meet, while trying to enjoy their time on campus.

JustMoney – a platform that helps South Africans make better financial decisions – in a statement encouraging students to save money and earn an extra income to lessen the financial burden, noted that higher education remains expensive, while economic growth is slow and inflation is increasing.

“Whether a student is self-funded, or state-funded, the cost of tertiary education, in addition to general living expenses, is increasing steadily,” said Sarah Nicholson, operations manager at JustMoney.

The average cost for higher education is about R107 600 a year by 2025, and this cost is expected to increase to R254 700 by 2035, explained Marius Pretorius, the head of marketing: Retail Services and Income at Old Mutual.

He noted that students from families with an annual income of less than R350 000 qualify for the National Student Financial Aid Scheme (NSFAS) to fund their education, but a student who comes from a household with an annual income that exceeds R350 000, but less than R600 00, is considered a “missing middle”, therefore students can apply for funding via the Comprehensive Student Funding Model (CSF).

JustMoney provided tips for students to not only save money, but to also earn an extra income and spend less money to reduce any financial burdens they continue to encounter.

According to JustMoney, students should have a budget to outline their expenses, from study fees, to food and clothing and other essentials, to sourcing inexpensive entertainment, such as low-cost campus events and joining social clubs.

Students are also encouraged to apply for bursaries and scholarships to fund their education, and buy second-hand textbooks or digital versions, which are often cheaper. Utilising textbooks from the library is another alternative.

Furthermore, for students to live a low-cost university life, they can share living costs with room-mates, such as accommodation and utility costs, and they can make use of student discounts by downloading apps such as Fomo and Varsity Vibe that offer information on student deals.

JustMoney explained that students should find part-time jobs, or be a “studentpreneur” to secure an extra income. The National Youth Development Agency (NYDA) and Small Enterprise Development Agency (SEDA) are government agencies that provide funding for young entrepreneurs, and they address youth development issues in society.

Finally, Nicholson advised students to avoid unmanageable debt. A student loan is considered “good debt”, because it’s an investment in one’s future; however, the loan must be paid back promptly under the loan terms.

“Your bank overdraft and credit card should not, however, be treated as income. Such funds are for emergencies only and should be paid off at month-end. These loans incur high interest and, when not paid off promptly, can lead to a cycle of unmanageable ‘bad debt’,” she said.

Also, avoiding extreme debt informs potential employers about a person’s credit history. “Potential employers, landlords, and insurers frequently do background checks. These include accessing your credit report, which is a detailed breakdown of your credit history, prepared by a credit bureau. It’s worth checking your credit report and credit score regularly to ensure the information is correct,” she said.

The Star

Hope Mafu

hope.mafu@inl.co.za