How Does a Bursary Differ from a Student Loan?

It doesn’t matter if you’re studying towards a higher certificate, diploma, or degree: the price of tertiary education is steep! And it’s only going to get more expensive, from increasing tuition fees to the rising price of transport, accommodation and study materials. Luckily, there are a few options for students in South Africa seeking financial assistance, including bursaries and student loans.

The main difference between a bursary and a student loan is in the repayment plans. Bursaries usually do not require you to make any repayments, however, some bursaries may require you to enter a service contract.  Student loans are similar to other types of loan agreements, and you will have to repay the full amount borrowed with interest and added fees.

What is a bursary?

Bursaries are awarded to qualifying students to encourage them to further their studies. Students can receive money for tuition fees, accommodation, living expenses, textbooks, and study devices. Apart from financial assistance, some bursary schemes may organise team building events, study groups, mentorship opportunities, and vacation work.

Qualifying students could have to meet academic and household income requirements. There are be some bursaries that have demographic requirements as well. For example, the GirlCodeZA Scholarship aims to encourage more women to enter the technology industry, and the Barberton mines bursary is open to residents of Ehlanzeni in Mpumalanga.

Where can I find a bursary?

There are a few online bursary platforms such as careerwise and studytrust which manage corporate bursaries. With these platforms, you can create an application and the bursary administrators will match your details to an appropriate bursary.

Alternatively, you can apply directly to companies for corporate bursaries or the government for provincial or municipal bursaries. Bursary adverts can be found on websites such as zabursaries.co.za or through your educational institution's financial aid office. Don't be afraid to approach your faculty's financial aid office or designated student council representative about open bursaries applications.

How do I apply for a bursary?

While the individual requirements differ, most bursary programmes will ask you to submit clear certified copies of your latest academic results, your ID and your parents/guardians' IDs, and proof of household income. In some cases, you may also be asked to provide proof of residence and a short cv. 

Always check the requirements of the bursary thoroughly before sending in your application. Most bursary programmes have a contact person or number listed in the event of queries; you can contact them to clarify requirements or terms and conditions before completing your application.

What is a student loan?

A student loan is a type of loan offered by lending institutions and the government to fund tertiary education. Student loans generally defer capital repayments for 12 months or until the student has graduated. However, much like other loans, you are liable for interest payments and additional fees.

Some banks may not have designated student loans but offer personal loans that can be used to further your studies. However, personal loans often do not have the same repayment structure and guarantor requirements as student loans. The interest rates and penalties may also vary.  You can take out a student loan from most major banks, including Standard Bank, Nedbank, FNB, and Absa.

How do I apply for a student loan?

Depending on the bank, applications for a student loan can be done online through their website, banking app, telephonically, or in person. You will likely need your ID, your surety’s ID and proof of income, proof of residence, and proof of acceptance at your educational institution.

Again, it's important to check the individual requirements of the student loan you wish to apply for. If you are unsure about the requirements or how to apply, you can contact your chosen bank's customer service centre. Alternatively, you can visit your local branch and ask to speak to a consultant about their loans.

Key differences between bursaries and student loans

Let’s look at four key differences between bursaries and student loans:

1. Student loans are approved based on your surety’s income and affordability. Bursaries are approved based on academic performance and financial need. Additionally, bursaries are usually awarded for specific fields of study and may be limited to certain educational institutions.
2. Student loans have to be repaid to the lender along with interest payments. Bursaries usually do not have to be repaid; however, you may be obligated to enter into a service contract with the company or government after graduation.
3. You may be able to negotiate the amount you borrow for a student loan, including the repayment term and the interest rate. The amount of money awarded by a bursary programme is usually non-negotiable. Additionally, the bursary may have non-negotiable academic and additional standards that you have to maintain to retain the bursary for the following year. This could mean passing all modules, maintaining a specified average for the year, or engaging in charity/mentorship work.
4. Student loan providers may allow you to make use of multiple funding options. Some bursaries may stipulate that you are not allowed to enter an agreement with any additional bursary programmes.

Should I apply for a bursary or a student loan?

Both bursaries and student loans have their pros and cons, and both do a good job of helping students finish their tertiary education. At the end of the day, a bursary or student loan should suit your financial and academic needs.

If you need help understanding your options further, you can contact your faculty’s financial aid office or your bank to discuss student loan offerings. Before signing any contract, read through the entire document carefully and make a note of everything that is expected of you.

If you opt for a bursary, this could mean maintaining a high academic standard, attending vacation work programmes, or participating in outreach activities. If you choose to take out a student loan, take note of the repayment schedule, interest rates, and any other fees.