Most students in a survey recently undertaken by Eduloan took out an average of 3.2 loans just to finance one year of study. And the reason topping the dropout list? Pure lack of finances and badly managed money.

Says Johan Wasserfall, CEO of Eduloan: “Students are coming to us for a loan, and as we adhere strictly to the requirements of the National Credit Act, we finance only according to their budget.

They then approach a bank - and perhaps a few micro-lenders - to make up the shortfall in order to afford that one year of study. While this is understandable - these students are passionate about receiving a quality education – it can also be dangerous.”

Many companies pay for the ongoing education or upskilling of their staff-members and – whether the student is required to pay the company back or whether the company foots the bill as a ‘perk’ of the job - this seems to be the ideal solution to hassle-free study financing for students.

Whereas students seeking independent finance usually require substantial collateral for a bank-loan and stand the risk of paying exorbitant and sometimes illegal costs through less-than-savoury small lenders, there are definite benefits to entering into a loan agreement with their company.

Firstly, it’s in the best interest of the company to ensure the fairest loan repayments, taking into account the interest rate and other charges – all factors of which many students remain blissfully and often dangerously unaware.

Secondly, if using a company such as Eduloan, which is totally focused on educational finance, the company is able to pay the institution directly and, if applicable, make automatic monthly deductions off the employee’s salary.

Not only does this substantially ease the often confusing administrative burden on the student, it completely eliminates the chances of the student missing payments and having to stop their studies – never a good thing for an employee’s work record, promotion opportunities and self-esteem.

“This is especially important if you consider that South Africa’s university dropout rate has reached alarming proportions in recent years,” says Johan.

“In fact, the Human Sciences Research Council’s recent study of about 34,000 students showed that of this amount, only 14,000 students graduated, with some 20,000 dropping out of their courses, usually either in their first year or midway through their second year of study.

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