A number of students that opt for student loans cannot afford to be self-funded due to a number of reasons.
A number of financial institutions offer student loans that help students afford essential costs such as tuition fees, registration fees, etc.
However, inflation linked-increases make it difficult to keep up with monthly repayments, as this means that the guarantor has less disposable money.
The change in inflation also affects interest rate levels, as the higher the inflation rate, the more interest rates are likely to rise.
According to Standard Bank’s student loan’s interest is linked to the prime lending rate and will increase or decrease when there is a change to the repo rate and the interest rate is also dependent on the guarantors risk profile.
In a statement, National Debt Advisors have explained that a rise or drop in the repo rate can significantly influence inflation and consumer buying power.
When it comes to self-funded students, political economy analyst Daniel Silke indicated that the squeeze is on the consumer, and on families in particular. Now more than ever, families need to dig deep because their own incomes are not keeping up pace with inflation.
Over the years, NSFAS has witnessed an increased demand for funding because parents and caregivers of self-funded students were negatively impacted on by the financial implications that were brought on by the Covid-19 pandemic.
This is the time when some working professionals were being retrenched, working less hours and some of them losing employment due to companies that closed their doors during this period.
Here’s How University Fees Are Affected By Inflation-Linked Increases
University tuition fees in South Africa can be affected by inflation-linked increases, as they are often linked to changes in the Consumer Price Index (CPI).
This implies that institutions may increase their tuition costs in line with a rise in the CPI. Ultimately, any change in the cost of living result in either an increase or decrease in tuition fees at these institutions.
