The first school term of 2020 is almost over. Have you already paid school fees for the second term? If not, a school loan could be the way to go.
Michelle Obama, former first lady of the United States, is quoted as saying: “Empower yourselves with a good education, then get out there and use that education to build a country worthy of your boundless promise.”
These inspiring words remind us of the power and importance of education, especially a good education that prepares a child for the future. A good education does not necessarily mean an expensive education, but it is often true that when you pay a bit more for a school or a university, your child (or you yourself) get a better education.
But often paying that little bit more can be difficult. This is where a school loan, or an education loan, can help you make ends meet.
Some financial institutions offer specific education loans, while with others you can take out a personal loan and use it only to pay your child’s school or university expenses.
While a student loan can offer benefits like paying the school or university directly, a personal loan has other benefits, such as giving you the freedom to decide how to spend the money. For instance, you might want a lump sum to pay school fees upfront for a term or even a year, or you might need money to pay for your child’s transport to school and back every day.
As with any other loan you take out, it is very important to do your homework before you commit to a school loan.
Here are the steps to consider:
- Understand exactly how much you need for a full schoolyear. School fees are just the beginning; your child also needs stationery, a uniform and maybe a new schoolbag. Depending on where you live, there might be transport costs every day, and food for lunch. Then there are extramural activities, sport and school outings – all of which usually cost extra. It might be rather scary to add up all the amounts, but being honest upfront is the only way you can plan properly and make sure you don’t run out of money halfway through the year.
- Look at all your options and think creatively about saving money. Here are some ideas:
- Find out from the school what discount you can get by paying school fees, and maybe other expenses too, upfront.
- Find out if the school has a shop where you can buy second-hand school clothes that are still in a good condition, or speak to friends whose children go to the same school – maybe they have uniform items that their children have outgrown, or even a schoolbag you can buy from them.
- Save money on school lunches by joining forces with other parents. For example, if you work with four other parents, each of you can pack five lunch boxes once a week. This allows you to buy ingredients in bulk, which is often cheaper, and you save time by being on lunch duty only once a week.
- Once you have looked at all your options, draw up your school budget for the year and discuss it with your child. It is important that he or she knows how much money is available for school activities so that you can decide together how best to spend it. For instance, if your child knows that there is money for either an outing or a sport activity, she can decide what she wants to do. In this way, you can avoid the disappointment of having to say “no” and your child learns valuable money skills from early on.
- Understand your own financial position so that you know how much you can afford to borrow. Keep a monthly budget and track all your expenses for several months before you make your borrowing decision.
- Put in the hard work to do loan comparisons. Different companies offer different deals and personal loan interest rates. It is always worth the time and effort to understand what is on offer and to work out what deal will be the best for you.
- Make sure you understand the full cost of the loan you take out. Ask the agent to explain all the fees and costs to you, including how to calculate the interest on a loan. Never make a decision until you know exactly what the loan will cost you over the full repayment period.
A school loan can make your life as a parent much easier, but to get the full benefit you have to do your homework properly. Then you can set your child on the road towards building a country that is worthy of her boundless promise, just like Michelle Obama says.