UK student loan repayment stats highlight similar SA issues

This is according to John Marsden, National Sales Director at PPS, the financial services provider focused on graduate professionals, who notes that local graduates face the same financial challenges of paying back their student loans. "There are two main reasons for this: the high cost of education, paired with poor management of finances as a result of lack of financial education.”

 

A PPS survey conducted among approximately 5000 South African graduate professionals in the first quarter of 2014 revealed that 90% of respondents are concerned about the rising cost of tertiary education.

 

Along with the general increase in the cost of living, the cost of tertiary education has increased significantly over the past 10 years, hindering the further education of many South Africans, says Marsden. "Government, associations and educational institutions need to work together to develop a way to make education more affordable and accessible.”

 

Bursaries and scholarships provide a great way for organisations, or individuals, to ensure that higher education is made available to those who may struggle to afford it, says Marsden. "This in turn will aid the growth of necessary skills in the country and ultimately boost the economy as a whole.”

 

Marsden says another major problem currently hindering the financial situation of graduates is the ongoing cost of a student loan. "It is vital that graduates keep track of their student loan and make a plan to factor in regular payments, as soon as they start earning so that the debt does not grow to an unmanageable amount”. Set a specific time frame for repayment and make sure that this is prioritised. Don’t spend on luxury, trendy things until the debt is repaid.

 

However, some graduates may struggle to make payments into their student loans as they try to find employment and simply stop paying the loan, says Marsden. "This is a big mistake as it can have long lasting impact on the graduate’s credit score, which will haunt their financial future. It is important to understand that the debt will not just vanish and it is better to contact the lender and arrange an affordable repayment solution rather than stopping the payment altogether.”

 

Marsden suggests graduates begin by drawing up a budget as soon as they graduate, factoring in a monthly loan payment schedule with the aim to pay off the loan within four years of graduating.

 

"As the cost of education continues to rise, it is imperative that organisations work together to make higher education more accessible to the public. In addition, graduates who do take student loans out need to be made aware of the costs involved and be educated about how to structure a payment plan. A Certified Financial Planner is the right person to assist with this,” concludes Marsden.