The National Student Financial Aid Scheme (NSFAS) provides financial assistance to students in South Africa to help them cover tuition, accommodation, and other study-related expenses. While NSFAS has largely transitioned into a bursary scheme for low-income students, those who received financial aid under the loan system must still repay their loans.
NSFAS Loan Repayment: How and When to Pay Back Your Student Loan
This guide explains how and when to pay back your NSFAS student loan.
Who Needs to Repay an NSFAS Loan?
Students who received NSFAS funding before 2018 were granted loans that need to be repaid. Since 2018, NSFAS has shifted to a grant system for qualifying students, meaning they do not have to repay the funds unless they fail to meet specific conditions. However, students who received financial aid before this change are still responsible for repaying their loans.
When Do You Start Repaying Your NSFAS Loan?
NSFAS loans are income-contingent, meaning repayment starts once the borrower secures employment and earns above the threshold set by NSFAS. As of recent updates:
- Repayment begins when your salary reaches R30,000 per year (R2,500 per month).
- Deductions increase progressively as your salary increases.
Read more: How to Budget for Your Student Loan Repayments While Job Hunting
How to Repay Your NSFAS Loan
1. Payroll Deduction
If you are employed, your employer may deduct your NSFAS loan repayment directly from your salary and transfer it to NSFAS. This method ensures timely and consistent repayments.
2. Debit Order
You can set up a debit order to automatically deduct repayments from your bank account each month. This is a convenient and hassle-free way to ensure you meet your obligations.
3. Direct Deposit or EFT
Borrowers can manually deposit payments into the NSFAS bank account via electronic funds transfer (EFT) or direct deposit at a bank branch. Always use your unique reference number provided by NSFAS to ensure payments are correctly allocated.
4. Online Payments
NSFAS may also provide an online portal where borrowers can make payments securely via credit or debit card.
How Much Do You Need to Repay?
The repayment amount depends on your income. The general repayment scale is as follows:
- R30,000 – R59,999 per year: 3% of annual salary
- R60,000 – R79,999 per year: 5% of annual salary
- R80,000 – R99,999 per year: 8% of annual salary
- R100,000 and above: 10% of annual salary
These percentages are deducted monthly and increase as your salary grows.
Interest on NSFAS Loans
NSFAS loans accrue a low-interest rate, which is determined annually based on the Consumer Price Index (CPI). This ensures that repayments remain affordable for graduates entering the workforce.
What Happens If You Don’t Repay?
Failure to repay your NSFAS loan can have consequences, including:
- Interest Accumulation: The longer you delay, the more interest accumulates, increasing your overall debt.
- Legal Action: NSFAS may take legal action to recover outstanding debts.
- Credit Blacklisting: Non-payment may affect your credit score, making it difficult to secure loans or credit in the future.
Can You Get Your NSFAS Loan Converted to a Bursary?
Some loans, particularly for students in scarce skills programs, qualify for partial or full conversion into bursaries. To be eligible:
- You must have completed your qualification.
- You may need to meet additional academic performance requirements.
- In some cases, working in the public sector for a set period can lead to a loan-to-bursary conversion.
How to Check Your NSFAS Loan Balance
To check how much you owe:
- Visit the NSFAS website and log into your account.
- Contact NSFAS via email or call their helpline.
- Request a statement of your loan balance from NSFAS.
Final Tips for Managing Your NSFAS Loan Repayment
- Start paying early if you can afford to, even before reaching the income threshold.
- Keep NSFAS updated with your latest employment and contact details.
- Budget for repayments to avoid financial strain.
- Seek financial advice if you’re struggling with repayment.
Repaying your NSFAS loan responsibly ensures future students continue to benefit from financial aid. Stay informed and manage your loan effectively to avoid unnecessary debt complications.
