How Study Loan Payments Work While the Student Is Still Studying

On a South African bank study loan, the months during study are not usually payment-free. The normal arrangement is that the interest is paid every month while the student is registered, which keeps the balance flat, and full instalments including capital begin after the course ends. Where no payment is made at all, the interest is typically added to the balance instead, so you end up borrowing the interest too and paying interest on it for the rest of the term.

What do you actually pay while the student is studying?

Three things, and only the first one is usually optional in any sense:

• The monthly interest on the balance drawn so far. Not on the approved limit — on what has actually been released. If the loan is drawn in stages across the academic year, the payment grows as each stage is taken up.
• The monthly service fee, charged on the account whether or not capital is being repaid.
• Any credit life premium, if cover is attached to the agreement.

What you are not paying is capital. That is the whole point of the concession and also the reason the balance does not shrink by one rand during the study years.

How much is the in-study payment?

Interest only, so the arithmetic is simple. The rate below is an illustration, not a quote from any bank. Take R60,000 drawn at a nominal 14 percent a year:

• Monthly interest: 60,000 x 14 percent / 12 = R700 a month.
• Over a twelve-month academic year: 12 x 700 = R8,400.
• Balance at the end of that year: still R60,000.

Add the service fee and any premium, and that is the real monthly commitment during study. Because it is interest only, it is substantially smaller than the instalment that follows, which is what makes the structure workable for a family paying fees at the same time. Running the same calculation on your own balance and rate is what the (Capitec) Student Loans SIM app does; it is an independent, unofficial simulation and guide, not a lender.

What happens if nothing is paid during the study period?

If the agreement allows a full payment holiday rather than interest-only payments, the interest does not disappear. It is capitalised: added to the balance, and then charged interest itself the following month. Same loan, same rate, nothing paid for twelve months:

• Balance after twelve months of monthly capitalisation: about R68,961.
• Interest added: about R8,961, against R8,400 if you had paid it monthly.

The R561 difference looks trivial, and on its own it is. The expensive part is what that extra balance does afterwards.

What does paying during study buy over the full term?

Carry both versions into repayment over 60 months at the same 14 percent:

• Repaying R60,000 over 60 months: about R1,396 a month, about R83,766 in total.
• Repaying R68,961 over 60 months: about R1,605 a month, about R96,276 in total.
• Difference: about R209 more every month for five years, about R12,510 more in total.

So paying R8,400 of interest during the study year avoids about R12,510 later, leaving you roughly R4,100 better off in rand terms — before counting a second or third year of study, where the effect compounds again. This comparison adds up rand paid at different times and ignores inflation, but the direction is not in doubt: unpaid interest is the most expensive money in the agreement, because you pay interest on it for the entire remaining term.

When do full instalments start, and who pays them?

Typically at the end of the course or shortly after, not at graduation ceremony or first payslip. The trigger is normally written into the agreement as a date or as the end of the final registered academic year, so it does not wait for a job.

Two points are worth pinning down in advance. First, a gap between finishing and starting work is your problem, not a built-in grace period, unless the agreement specifically grants one. Second, the person who pays is the person who signed. If a parent is the applicant or surety, the full instalment is collected from the parent, and any plan for the graduate to take over is a family arrangement, not something the bank is party to.

Deregistration matters too. The in-study concession usually depends on the student being registered, so dropping out can end the interest-only period early and bring the full instalment forward.

What should you confirm with the bank about the in-study period?

• Interest-only or no payment at all, and if no payment, whether the interest is capitalised.
• How long the concession runs, and whether it covers the full course or one year at a time.
• Whether the monthly service fee and any premium are also deferred or payable from the first month.
• Exactly what date full instalments begin, and what the instalment will be in rand.
• What happens on deregistration, a repeated year or a course change.
• Whether extra payments during study are allowed and go against capital rather than being held.

All of that sits in the quote and the pre-agreement, which a registered credit provider must give you before you sign, together with the rate, the fees and the total cost. The register of credit providers and the current rules are published at the official National Credit Regulator site, ncr.org.za. Treat the figures here as provisional and confirm the actual terms with the bank.

Frequently asked questions

Can I pay capital as well while the student is studying?

Often yes, and it is usually the cheapest thing you can do with spare money, because it reduces the balance that the later instalment is calculated on. Confirm that extra payments are applied to capital rather than held as a credit on the account.

Does the interest-only payment change during the year?

Yes, in two ways. It rises as further stages of the loan are drawn, because interest is charged on the balance actually released. And if the rate is linked to the prime rate, the payment moves whenever that rate moves.

Can this app tell me my real in-study payment?

No. It cannot access any account, so it works only on figures you type and the result is an estimate for planning. Always confirm the actual terms with Capitec Bank directly.

The sentence to look for in the agreement is the one that says what happens to interest during the study years, because that single clause decides whether the balance stays still or quietly grows. If you can afford the interest while the student studies, paying it is almost always the cheaper road. To model both versions on your own numbers, the independent, unofficial app on Google Play needs no account, no login and no personal data. It does not offer loans and cannot be used to apply for a loan, does not process applications, disburse funds, check application status, or access any account, and it is not an official representative of Capitec Bank and not affiliated with, endorsed by, or connected to Capitec Bank. All figures are estimates for planning only; your own credit agreement is what counts.