Funding a tertiary education is no small feat. This expense is now in the same league as buying a car or even a home. The high cost of a higher education has made it necessary for many school leavers to take out student loans.

Under-resourced parents can no longer hand out cash to launch their children’s career. The most they can do is sign surety for a bank loan. While a student loan may be a necessary evil, very few individuals realise how costly this option actually is.

If for example, you borrowed R30 000 for a period of four years at an interest rate of 15 percent, the repayment would be R815.66 per month. Obviously this payment would be a hefty commitment for a full-time student, so the bank allows the student to only pay the interest portion of the payment. The capital remains unpaid for the full period of the loan. The borrower can opt to settle the debt and pay the R30 000 or refinance it.

What this means is that at the end of the four years the loan starts again. Unfortunately most people have to choose this route. So what started out as a four-year loan turns into an eight-year commitment with exorbitant interest charges. The interest amounts to a whopping R18 302.

It is a tough one to get around, so here are some tips to help you to avoid using this kind of financing.

  • Your first port of call would be to find an interest-free loan from a family member. Agree to a set monthly payment while you are studying and arrange for an increase when you start full-time employment.
  • Find out about grants or academic bursaries from your chosen place of study.
  • This is really simple — get a part time job. It may put a little extra pressure on you but many people have been able to juggle work and studies successfully.
  • Consider delaying your studies and work for a year to build up capital.
  • Find a job that offers a work-study programme. Beware, however, that if your employer pays for your studies, they may require you to work for them for at least three years.
  • Moving out of home may seem very appealing but it will cost you a small fortune. Stay at home and keep your overheads to a minimum.

Most people have to take out student loans anyway. If you're one of them, be disciplined about putting any extra money you may have into repaying the loan, however small and insignificant it might seem. Once you start working, aim to pay it off as soon as possible.