Stadio, the owner of tertiary education brands such as film school Afda and Milpark Business School, is partnering with Capitec Bank to offer unsecured student loans.
The private higher education group, which was spun out of Curro and listed on the JSE in October 2017 and forms part of the PSG stable, says it is trying to make higher education more affordable.
The company has more than 34,000 students enrolled at various campuses with about 80% of students studying online and the remainder engaged in face-to-face learning.
CEO Chris Vorster announced the pilot partnership with the bank while speaking at the Stadio annual general meeting on Tuesday.
The new Capitec loan differs from traditional student loans in that most student loans from the big four banks require the backing of a guardian or a person’s assets such as a home.
Stadio also works with traditional banks who offer regular student loans and the National Student Financial Aid Scheme (NSFAS).
Capitec is one of the country’s largest unsecured lenders, offering loans for as much as R250,000 for terms as long as 84 months without the backing of an asset. It has faced scepticism about its lending practices and some investors have expressed concern about the sustainability of its debt book as SA consumers come under increasing financial pressure.
Unsecured lending is typically more expensive and risky for the lender and the borrower than secured debt.
Capitec’s head of marketing, Francois Viviers, said that the bank is using lending to support initiatives that can improve a borrower’s ability to earn and repay debt. It is lending for education, home improvements and medical emergencies under a “purpose-driven lending” initiative.
Credit tool
The Stadio Capitec pilot lending product, which was launched at end-April, provides an opportunity for students who would not qualify for funding elsewhere to access finance, said Stadio CFO Samara Totaram.
Totaram heaped praise on Capitec’s credit application tool.
“It is a very simple tool. Someone can apply online for the loan and get a response almost immediately detailing the amount of capital available to them.
“We believe it important to widen access to education, and having the financial means [to pay for tuition] is one way to be able to do that,” she said.
The families of some students earn too much to be eligible for state funding under the National Student Financial Aid Scheme, but not enough to qualify for a traditional student loan from a bank.
If a student of Milpark Business School or another Stadio brand qualifies for a loan, Capitec will pay the education institution directly.
Viviers said the bank may offer a lower interest rate than that on a personal loan for an unspecified purpose.
Capitec is trying a similar unsecured-lending model to fund car purchases through WeBuyCars, the second-hand seller owned by Transaction Capital. Viviers said if customers want to buy cars that are older than five years, other banks are unlikely to fund the car loan, but Capitec can do so.
It is also funding home improvements and pays hardware store CTM directly if customers are approved for a loan to remodel a house.
It is partnering with Mediclinic and paying the hospital directly for certain medical emergencies.
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