Poorly performing economy of South Africa continues to discourage entrepreneurship while promoting education and employment as a solution to ending poverty. Many people of South Africa believe that acquiring a University degree spells the end of social ills that affect many families. As much as everyone believes in this, lack of funding for tertiary education continues to frustrate the youth. A large percentage of Matriculants is not able to pursue tertiary education due to lack of funding.
Matriculants who complete their high school education stand a better chance to secure a bursary or a study loan. Scholarships are often far from reach as they tend to fund postgraduate qualifications in South Africa.
We are going to discuss a bursary vs loan to help our readers understand the difference between the two. Most importantly we want them to make informed decisions and also be aware of obligations that come with a bursary or a study loan.
What is a Bursary?
A bursary is a financial assistance that get awarded to qualifying students who apply while meeting eligibility criteria. It is awarded by companies or organisations that are active in the economy. Government, through its various spheres ranging from national to local, also offers bursaries to deserving students.
Privately owned companies design financial aid scheme with the intention of creating a pool of qualifications in case they need to increase their workforce. This is why bursaries awarded are often in line with the company’s area of operation or economic sector where it is interested. Because bursaries require assessment of applicant’s personal and academic abilities, many companies locate these schemes under Human Resources department. This allows for interviews and other assessment criteria to fall within the same department responsible for human capital.
It is the responsibility of the company offering the bursary to craft a criteria for eligibility for the award. It must also set out terms and conditions for the financial support scheme. Fields of study and expenses that are teken care of must also be put together to assess bursary applicants for suitability.
Below is what a set of requirements for the bursary commonly look like:
- Eligibility criteria
- Fields of study
- Bursary value and benefits
- Documents needed
- Application procedure
- Bursary closing date
- Contact details for the bursary office
Some companies and organization might have more requirements for applications to be considered.
Bursary Main Features
- No repayment obligation – when it comes to bursary vs loan, the bursary always wins because it carries no pay-back clause except when the holder fails to complete the qualification awarded for. This always gets very complicated especially because it is impossible to repay when not employed. Raising money to complete your studies is a nightmare especially when you already have pressure to repay your bursary while studying.
- Merit based – most bursaries if not all award bursaries on basis of exceptional academic performance. Financial neediness is alway looked at after academic capability. Some companies may add race due to Black Economic Status requirements depending on who the company does business with.
- Service contracts: Many bursaries, particularly those offered by companies or government departments, may require you to work for them for a set time after graduation as a way of “repaying” the investment they made in your education.
- Limited availability: Bursaries can be highly competitive due to the limited number available and the large number of applicants.
What Is A Study Loan and How Is It Different From A Bursary?
A study loan is different from a bursary in that you are borrowed money to study. You must pay the money back with interest after completing your studies. The criteria to qualify for a study loan is a bit different from that of a bursary in that it does not make emphasis on your academic performance. Organizations that offer student loans tend to look at affordibility and ability to repay what is owed to them with interest. Most students look at student loans as a second or third option after bursaries and scholarships.
Many financial institutions like bank are leaders when it comes to this type of loans with FNB, Absa, STD bank, Capitec bank on the lead. NSFAS is also another good example of a study loan although it tends to have more flexible repayment terms comapred to banks and other financial institutions. This is because it is funded by the government of South Africa with the intension to promote skills development.
Key Features of a Student Loan
- Repayment obligation – every student loan must be paid back with interest after completion of studies. The interest charged forms part of the agreement you sign when your application is approved.
- No availability limit – anyone who applies and is able to demonstrate the ability to repay gets approved. The main driver is affordibility as opposed to academic capabilities.
- Interest rates – interest accummulates and must be repayed with the total amount owed to the bank.
Bursary vs Loan: Apple to Apple Comparison
| Aspect | Bursary | Loan |
|---|---|---|
| Repayment Obligation | No repayment after completion | Must be repaid after completion |
| Eligibility Criteria | Based on merit or financial distress | Based on affordibility |
| Service Obligation | Work obligation upon completion | No employment obligation |
| Cost | Free | Capital borrowed plus interest accrued |
| Availability | Limited, on high demand | Available from banks & NSFAS |
Which is the Better Option Between A Bursary vs Loan?
There are many factors to consider and most are based on personal situation. One may feel that a bursary works better while the other may decide to go for a loan.
If you are academically capable and you maintain top results, a bursary might be an option for you. Bursary applications are assessed purely on academic performance combined with financial situation which varies from one student to another.
On the other hand students who are academically challenged and are in fiancial distress may consider approaching a bank for a student loan. This option depends purely on whether you will be able to repay the bank or NSFAS.
Student Loans Available in South Africa
Here are some of the student loan options available in South Africa:
- National Student Financial Aid Scheme (NSFAS): NSFAS offers loans to students from low-income families, which are sometimes converted into bursaries depending on academic performance.
- Standard Bank Student Loans: Standard Bank offers flexible repayment options, with competitive interest rates for full-time and part-time students.
- Absa Student Loans: Absa provides loans that cover tuition fees, accommodation, textbooks, and other related expenses, with flexible repayment terms.
- Nedbank Student Loans: Nedbank allows students to borrow for both full-time and part-time studies, with repayment starting after completion of studies.
- Fundi: A dedicated educational finance provider in South Africa, Fundi offers a variety of student loans for tuition and other study-related expenses.
Frequently Asked Questions (FAQs)
1. Can I get both a bursary and a student loan?
Yes, it is possible to apply for and receive both a bursary and a student loan. Many students use a combination of both to cover their full education expenses.
2. Do I have to pay back a bursary?
No, bursaries are non-repayable. However, some bursaries come with conditions, such as working for the bursary provider after graduation.
3. When do I start repaying a student loan?
Repayment of a student loan typically starts after you have completed your studies, although some loans may require interest payments while you are still in school.
4. What happens if I don’t meet the conditions of my bursary?
If you fail to meet the conditions (such as maintaining a certain academic standard or completing the required service), you may be required to repay the bursary, or the bursary may be converted into a loan.
5. How can I apply for a student loan?
You can apply for a student loan directly through banks or financial institutions like NSFAS. Each lender will have specific requirements, such as proof of enrollment, a co-signer (guarantor), and documentation of expenses.
Conclusion
When choosing between a bursary and a student loan, it’s essential to assess your financial situation, academic performance, and career goals. While bursaries offer the advantage of free education funding, student loans can be a lifeline for those who don’t qualify for bursaries or need additional financial support. Understanding the differences will help you make the right choice for your future.