The National Student Financial Aid Scheme (NSFAS) has clarified the mechanics of its loan interest structure for beneficiaries. Loans remain interest-free throughout the student's academic tenure. NSFAS loan Interest accumulation begins 12 months post-exit from the institution, be it graduation, course completion, or withdrawal.
NSFAS has stipulated that the interest rate will be pegged to the prime lending rate as of April 1st annually, minus 100 basis points (1%). Interest is calculated daily and compounded monthly, meaning it is added to the principal balance each month.
In-Duplum Rule and Repayment Obligations
To protect borrowers, NSFAS adheres to the in-duplum rule, which dictates that accrued interest cannot exceed the initial loan amount. This ensures that the total interest burden does not surpass the original capital sum.
Repayment commences during the first month of employment, with monthly instalments covering both the principal loan amount and accrued interest. NSFAS has also confirmed that students can settle their loans early without prior notification, requiring payment of the outstanding balance and accumulated interest.
Loan Requirements and Settlement
Students are obligated to repay the full loan, encompassing both the principal and any interest accrued post-study.
Loans are interest-free during the study period and will begin accruing interest 12 months after the student’s exit date,
NSFAS further stated, "The repayment will be done in monthly instalments that include both the loan amount and accrued interest." This clarification aims to provide transparency regarding the financial commitments associated with the NSFAS loan scheme.
