Student Loans 2026: Fundi vs. Bank Loans Explained

Key Takeaways: The Loan Reality

• The “Surety” Rule: You (the student) cannot get a loan alone. You need a parent/guardian with a salary to sign for you.
• Fundi: Best if your parent works for the Government. Pays fees directly to the university.
• Bank Loans: Best for Low Interest Rates (if your parent has a good credit score).
• Repayment: Most banks let you pay only interest while you study, and the full amount after you graduate.

The NSFAS rejection SMS has arrived. The bursary list is empty. You are now in the “Missing Middle”—too rich for free education, but too poor to pay R60,000 upfront.

Your last resort is a Student Loan.

Many students are scared of loans. They hear “debt” and run away. But investing in a degree that increases your earning potential is “Good Debt.” The trick is choosing the right lender.

In South Africa, you have two main options: Fundi (formerly Eduloan) or a Commercial Bank (Standard Bank, FNB, Capitec, Absa). Here is the honest comparison to help you choose.

Option 1: Fundi (The Education Specialist)

Fundi is not a bank. They are a specialized credit provider focused purely on education. They are famous for helping civil servants (teachers, nurses, police officers) fund their children’s studies.

How it Works:

• No Cash: Fundi never gives you cash. They pay the university/college directly.
• Salary Deduction: If your parent works for the government or a large company partnered with Fundi, the installment is deducted directly from their salary (Persal system).
• What it covers: Tuition, Registration Fees, and Accommodation (if it’s on-campus). They also fund laptops.

Pros:

• Easier Approval: They are often more lenient than banks regarding credit scores.
• Historical Debt: Fundi is one of the few lenders that will pay off last year’s outstanding fees so you can register for this year.
• Government Employees: Instant approval for many state workers.

Cons:

• Interest Rate: Often slightly higher than the banks’ “Prime” rate.
• Strict Use: You can’t use the money for food or transport.

Option 2: Commercial Bank Loans (The Big 4)

Standard Bank, FNB, Absa, and Nedbank all offer specialized “Student Loans.” Capitec offers an “Education Term Loan.”

How it Works:

• The “Surety”: You need a parent/guardian who earns at least R3,000 – R5,000 per month to sign as surety.
• Repayment Structure: This is the biggest advantage.
  • While studying: Your parent pays ONLY the interest (e.g., R400 pm).
  • After graduation: You get a “grace period” (usually 6-12 months) to find a job, then you start paying the full loan back.
• What it covers: Tuition (paid to uni), PLUS allowances for books, laptops, and equipment (often paid into the student’s account).

Pros:

• Lower Interest: If your parent has a good credit score, banks offer interest rates as low as Prime (11.75%) or even lower.
• Flexibility: You can often get cash for a laptop or textbooks to buy where you want.

Cons:

• Strict Credit Checks: If your parent is blacklisted or under debt review, the bank will reject you immediately.
• The “Gap”: If you drop out, the full loan becomes payable immediately.

Comparison Table: Fundi vs. Banks (2026)

Feature	Fundi	Standard Bank / FNB / Absa	Capitec
Who Signs?	Parent/Sponsor (Salary Deduction preferred)	Parent/Surety (Debit Order)	Parent/Sponsor
Min Income	Varies (check employer partner)	R3,000 – R5,000 pm	R3,000 – R5,000 pm
Interest Rate	Fixed (Often higher)	Variable (Prime linked)	Fixed (Discounted)
Payment Mode	Direct to University	Tuition to Uni; Books to Student	Direct to Institution
Repayment	Pay full installment immediately	Interest Only while studying	Pay full installment immediately
Covers Old Debt?	YES (Major Advantage)	Generally No	Case-by-case

Spotlight on Specific Banks (2026 Offers)

Standard Bank (The Market Leader):

• Offers loans at Prime Rate.
• Requires surety earning R3,000+.
• Can cover accommodation and equipment.

Capitec (The Disruptor):

• Offers “Education Finance” up to R500,000.
• Fixed interest rate (so your payment doesn’t change).
• Note: Capitec loans usually require full repayment to start immediately (no “interest only” period), but the term is longer (up to 84 months), making monthly payments lower.

FNB:

• Interest rates are personalized (can be Prime – 0.5% for excellent clients).
• Allows you to borrow R4,000 to R80,000 per year.

The “Surety” Problem (Why you get rejected)

90% of student loan rejections happen because the Parent fails the credit check, not the student.

• Blacklisting: If your parent has unpaid clothing accounts or bad debt, the bank cannot legally lend to them.
• Affordability: The bank looks at your parent’s “Disposable Income.” If they earn R15,000 but spend R14,500 on bills, they cannot afford the loan installment.

The Solution:

If your parent is blacklisted, try asking a working sibling, aunt, or grandparent (if they have a pension/income) to sign as surety. It does not have to be your biological parent.

How to Apply (Document Checklist)

Whether you choose Fundi or a Bank, have these ready before you walk into the branch:

1. ID Documents: Yours and the Surety’s (Certified).
2. Proof of Income: Surety’s latest 3 payslips.
3. Bank Statements: 3 Months (for the Surety).
4. Quote / Fee Statement: An official letter from the university showing how much the fees are for 2026.
5. Proof of Registration: Or an Acceptance Letter.

Conclusion: Which One Should You Choose?

• Choose Fundi If: Your parent works for the government, or you have historical debt (owing fees from last year) that prevents you from registering.
• Choose a Bank If: Your parent has a good credit score and you want the lowest possible interest rate, or if you need the “Interest Only” repayment option to keep monthly costs down while you study.

Do not wait for registration to close. A loan approval takes 3-7 days. Go to the bank today with your parents.

Disclaimer: ApsScore.com is an information guide. We do not provide financial advice. Interest rates and terms are subject to change by the credit providers.