How to lighten the student loan and insurance burden when financing your child’s education

This year, for the first time, the National Student Financial Aid Scheme (NSFAS) has acknowledged that there is a “missing middle” – the group of students whose families earn more than R350,000 but less than R600,000 a year.

NSFAS has launched a loan scheme to cover this segment. The criteria are:

• An annual household income between R350,000 and R600,000;


• Your child must be accepted to study at a TVET college or public university for either under- or postgraduate studies;


• You can apply in years one, two, three or four; and


• You must sign a loan agreement if you qualify for the loan.

Bank-financed education 

1. Once studies are completed or the year that you are funding has been completed, the loan is normally transferred to the student and the premiums increase, irrespective of whether the student has found employment;


2. A graduate can sometimes approach their employer and negotiate the settlement of their student loan in exchange for the equivalent years of service to their employer;


3. You need proof of registration at a recognised South African tertiary institution, your matric certificate or previous year’s academic results (if you have already started your studies) and an invoice or statement reflecting your university fees, accommodation and textbook costs.


4. The cost of credit should give you a breakdown of how much you can expect to pay and also show you the service fees, interest rates and repayment terms, as well as the total cost;


5. If your child is a full-time student, then the interest and service fees are payable while they are studying, and they must start making full repayments within six months of completing their studies or getting a job, whichever comes first; and


6. If your child is studying part-time, you must start repaying the loan immediately.

Insurance notes for student children

• Disclose both the primary and secondary location of your child’s belongings to insurers. The primary location would be where the belongings are for most of the time. “This proactive step ensures cover accurately reflects where valuable items may be stored, minimising potential delays or rejections in the event of a claim,” says Werner Bosman, chief executive of PPS Short-Term Insurance;


• You can take out a supplementary content cover insurance policy for protection against theft, fire or damage to property stored at a secondary location;


• When dealing with the tertiary institution or residence, ask questions about security protocols, including surveillance, access control and emergency response plans. Your insurer can customise the cover to specific risks;


• If your child has a car at their disposal, update any insurance policies covering the vehicle. Important details include where the car will be parked and what security protocols are in place. Your child should also be noted as the regular driver;


• When it comes to car insurance, make sure you have cover for at least balance of third party, fire and theft, with perhaps additional personal liability top-up cover; and


• Check that high-value items such as cellphones and laptops are specified in the policy at replacement value. Make photocopies of receipts for high-value items so that you have an electronic copy of your proof of purchase. Bear in mind that the replacement costs are likely to escalate over time and the values on your policy should be updated each year to allow for inflation. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.