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So, you've done your time in school, and you're finally heading into the big bad world, well, university at least. You've probably spent hours looking at campuses you'd like to apply to, researched all the different courses and already planned the first epic parties you're going to throw.

There's just one thing that stands between you and student life: finance, or rather the lack of it. If your parents aren't going to help you out, you're going to have to find the money elsewhere. The good news is that you have options, and they don't all involve working three jobs while trying to pass Medicine. In South Africa, a student loan is a viable option, but before you sign up for anything, you should consider a few things:

Personal loans vs student loans

Many students and parents feel the need to take out a personal loan to pay for university. This is either because students don't know the ins and outs of student loans, or because parents feel responsible for their child's education. But personal loans are not the best option. Of the following four loan features, at least two are always better in the case of a student loan. 

Repayment plan

The number one reason student loans are better than personal loans is the way they are repaid: with a student loan the monthly payments are made while you are studying are only on the interest on the loan. Once you have finished your studies, you (or the principal debtor) will then have six to 12 months (the grace period afforded to you to find a job) before you start monthly repayments. Your student loan would then need to be paid within four to five years (as a general rule). With a personal loan, on the other hand, you start repayments almost immediately.

Interest rates

Student loans also tend to have much lower interest rates than personal loans. On average, interest rates on personal loans start at 15% while student loans start around 10.5%. Student loan interest rates are determined by several factors, such as the year you are applying for as well as the type of certification you are trying to attain. Though you should take these into account, don't let them deter you from pursuing your ideal career.

Liability

Before you sign up for your student loan, make sure you understand all the red tape around liability. These rules differ from bank to bank. For example, student loans through Nedbank and Standard Bank need to be in the name of the student applying for the loan while Absa and FNB allow parents or sponsors to sign for the loans, thereby taking on the responsibility for the repayments. They are then considered the 'principal debtor'.

Surety

If you decide to go with a loan that will be put in your name (maybe the interest is lower) you might need someone (a parent or sponsor) to sign surety - a contract that states that this person will make repayments if you are unable to. You will almost certainly need this kind of agreement if you don't have a job and aren't earning an income.

Learn more

For more useful money-related tips, sign up for our Money Mailer. In this free monthly newsletter, we give you more great content on topics ranging from saving to borrowing and everything inbetween. If you've ever wanted to know how to save for university, how to reduce your living expenses, or how to buy a car, the insights in these article can leave you wiser, wealthier, and better equipped to make the most of your money.

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