"Education should be a ladder to opportunity, not a chain of debt. By addressing the student debt crisis, we can unlock the potential of our youth and build a brighter future for South Africa." - Dr. Lebogang Matlala

Student loan debt is the worst possible type of debt – but how?

Think about it: if a businessman gets himself into debt, he can declare bankruptcy. Whilst with student loan debt, you can't do that. It hangs around your neck for the rest of your life.

Back in 2020, just after graduation, I remember questioning whether I should further my studies or get a job so that I could pay outstanding fees to get my certificate.

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4 years later: here I am, drowning in debt, because I chose to "further my studies".

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For many professions, obtaining an undergraduate degree is just the first step. Careers in fields such as accounting, audit and tax often require additional qualifications, such as the Certificate in the Theory of Accounting (CTA), Initial Test of Competence (ITC), and Assessment of Professional Competence (APC) for aspiring chartered accountants.

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These further studies come with their own costs, adding to the already substantial debt from undergraduate studies.

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For example, a trainee accountant earning a modest salary must juggle the costs of CTA, ITC, and APC exams, which can amount to tens of thousands of rands.

This would be on top of repaying their undergraduate student loans. This dual financial burden can be overwhelming, leading many to abandon their career aspirations.

In South Africa, the rising cost of higher education has burdened many graduates with significant student debt. This financial pressure is increasingly shaping the career choices of young professionals, often steering them away from their passions and towards more lucrative but less fulfilling paths.

As the country grapples with high unemployment rates and economic inequality, the impact of student debt on career decisions has become a critical issue.

According to the National Student Financial Aid Scheme (NSFAS), over 700,000 students in South Africa rely on government loans to fund their education.

While this support is crucial, the repayment terms can be daunting. Graduates must start repaying their loans once they earn a minimum annual salary of R30,000, with interest accruing from the day the loan is disbursed.

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For many, this means entering the workforce with a financial millstone around their necks.

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Student debt is a heavy burden that influences not just where we work, but how we live. A 2022 report by the South African Institute of Chartered Accountants (SAICA) revealed that 60% of graduates with student debt prioritise salary over job satisfaction when choosing a career.

The financial strain of student debt limits graduates' ability to contribute to the economy. a study by the Human Sciences Research Council (HSRC) found that 45% of graduates with student debt delay major life decisions, such as buying a home or starting a family, due to their financial obligations. Many young professionals with student debt can't invest or save for emergencies, affecting their long-term financial security; on a broader scale, it dimmish disposable income and reduces consumer spending, slowing economic growth.

The burden of payment deadlines contributes to stress, anxiety, depression and other mental stress challenges. It makes one feel like they are not progressing in life – you are just standing still in the centre of the world, and everything around you is moving, and you are just there waiting for your breakthrough.

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Inspired by an article I read on CoMoney, here's how you can manage student debt:
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Step 1: Understand Your Debt

• Start by noting the total amount borrowed or owing to the Institution known as the principal. This is the base amount on which interest is calculated. Understand whether your loan has a fixed or variable interest rate. A fixed rate remains the same throughout the loan period, while a variable rate can fluctuate based on market conditions.
• Look into how your repayments are structured. Are they monthly or quarterly? How long is the repayment period? Knowing this helps in planning your finances accordingly.
• Learn how the interest on your loan is calculated. Is it compounded daily, monthly, or annually? This affects how quickly your loan balance grows over time.
• Check for Fees and Penalties
• Determine the penalties for late payments. Even occasional late payments can significantly increase your debt due to these fees.
• Some loans come with initial processing or administration fees. Check if these apply to your loan and how they impact your total debt.
• If you plan to repay your loan early, check for any prepayment penalties. Some lenders charge fees for early repayment as it affects their interest earnings.
• Be aware of any clauses in your loan agreement that allow changes in fees or interest rates during the repayment period.
• Some loans offer repayment plans based on your income, which can be beneficial if starting with a lower salary.

Loan Forgiveness Opportunities: Research if your profession or employment sector offers any loan forgiveness programs. These can significantly reduce your overall debt.

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Step 2: Assess Your Financial Situation

• Assess your monthly income to understand how much you can realistically allocate towards loan repayment. Develop a budget that accounts for your essential expenses and prioritises loan repayments.

Step 3: Strategize Loan Repayment

• Adopt the 'avalanche' approach by paying off loans with the highest interest rates first.
• If managing multiple loans is challenging, explore consolidation options for simplification and potentially lower rates.

Step 4: Explore Repayment Options

• Know the duration of each loan's repayment period and any grace periods offered.
• Investigate Deferment and Forbearance - For financial hardships, explore options to temporarily pause or reduce payments.

Step 5: Leverage Extra Income and Savings

• Allocate any unexpected income, like bonuses or tax refunds, to your loan.
• Identify and reduce non-essential expenses to free up more funds for loan repayment.

‍Step 6: Stay Informed and Flexible

• Keep abreast of any changes in student loan policies or interest rates in South Africa.
• Be prepared to adjust your repayment strategy as your financial situation changes.

Step 7: Seek Professional Advice

• Consult Financial Experts - If needed, seek advice from financial advisors to optimise your repayment plan.

Step 8: Maintain Consistency and Discipline

• Ensure timely and consistent payments towards your loan.
• Keep your end goal of financial freedom in mind to stay motivated.

Paying off student loans is a journey that requires patience, and perseverance. And most importantly: planning. By understanding your loans, creating a realistic repayment plan, and staying informed and adaptable, you can navigate the path to becoming debt-free. I know that it is not as easy as these steps make it out to be but remember, each payment is a step closer to your financial independence.

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