Does NSFAS charge interest on study loans?

NSFAS offers a lot of help to those who are seeking access to tertiary education by providing financial assistance in the form of loans and bursaries.

Knowing the repayment terms of NSFAS funding, particularly regarding interest charges, is necessary for students in making informed decisions about their financial future.

What is the difference between an NSFAS loan and a bursary?

NSFAS offers two primary funding options: loans and bursaries.

Bursaries are essentially free grants awarded to students based on financial need and academic merit.

These funds do not need to be repaid unless the student fails to meet specific eligibility criteria, such as academic progress requirements.

On the other hand, NSFAS loans are financial advances that must be repaid with a grace period after graduation or exiting the education system.

While interest-free during studies, interest does apply under specific circumstances during the repayment phase.

When do I start repaying my NSFAS loan?

The repayment of NSFAS loans commences one year after a student graduates or exits the system.

This grace period allows graduates to find employment and establish financial stability before repayment obligations begin.

For students who received funding in 2017 and before, an additional 12-month interest holiday applies after the initial grace period.

How much does NSFAS repayment cost?

NSFAS uses an income-contingent repayment (ICR) system.

This means that the monthly repayment amount is directly tied to your post-graduation income.

The ICR ensures affordability and prevents graduates from facing undue financial burdens.

This is a view of the repayment structure:

  1. If you earn R30,000 per year or less, you don’t make any repayments.
  2. For income between R30,000 and R59,300, you contribute 3% of your annual salary.
  3. The repayment rate increases by 1% for every R6,600 earned above R30,000.
  4. The maximum repayment rate is 8%, applicable to those earning over R59,300 annually.

What happens if I can’t afford to repay my NSFAS loan?

NSFAS offers various options to assist graduates struggling with loan repayment. These include:

  1. Income reassessment: If your financial circumstances change significantly, you can request a reassessment of your income and repayment obligations.
  2. Deferment: Under specific circumstances, such as unemployment or further studies, you can temporarily defer your repayments.
  3. Debt restructuring: In extreme cases, NSFAS may consider restructuring your debt to make repayments more manageable.

Are there ways to convert my NSFAS loan into a bursary?

NSFAS offers a partial bursary conversion program based on academic performance.

Up to 40% of your loan can be converted into a bursary for each year of successful study.

This conversion is calculated at the end of the academic year.

For instance, if you receive a loan of R40,000 for a three-year degree program and successfully complete your first two years, R16,000 per year (totaling R32,000) would be converted into a bursary, reducing your overall loan amount.

What resources can help me manage my NSFAS loan repayment?

NSFAS offers various resources to assist with loan management and repayment:

  1. NSFAS website: The NSFAS website provides comprehensive information on loan repayment, including a repayment calculator to estimate your monthly contributions.
  2. NSFAS contact center: The NSFAS contact center is available to answer your questions and address any concerns you may have regarding your loan.
  3. Financial aid office at your university: Your university’s financial aid office can offer support and guidance specific to your NSFAS funding and repayment options.

What happens if I cannot afford to repay my NSFAS loan?

NSFAS offers various options for struggling borrowers. These include:

  1. Income reassessment: If your financial circumstances change significantly, you can request a reassessment of your repayment plan.
  2. Deferment: You may be eligible to temporarily postpone loan repayments due to extenuating circumstances like unemployment or illness.
  3. Debt restructuring: In certain cases, NSFAS may consider restructuring your debt to make repayments more manageable.

It’s wise to communicate any difficulties with NSFAS to explore potential solutions and avoid defaulting on your loan.