Department Considers Loans To Assist With Missing Middle Funding

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The Department of Higher Education and Training is considering introducing loans to provide financial support to higher education students who are apart of the "missing middle" income bracket. 

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The South African government has been considering many financial support options for students who find themselves in the "missing middle" income bracket. 

Students who belong to the missing middle are those who are too poor to afford university themselves but also not poor enough to qualify for government funding such as the National Student Financial Aid Scheme (NSFAS). 

In order to qualify for NSFAS funding, students must come from households with a combined household income not exceeding R350 000 per annum. Missing middle students' combined household income exceed this threshold but these households are still unable to afford tertiary education. 

The Acting Deputy Director-General: Universities at the Department of Higher Education and Training, Dr Thandi Lewin said that as part of the long-term development of a new and comprehensive student funding policy the government should explore the establishment of a loan scheme to financially support missing middle students. 

The loan scheme would take a long period of time and planning to be implemented so the Task Team advised that the Department should explore the possibility of a credit guarantee model for loans in the short term. 

They advised for this short-term loan model to be implemented for missing middle students from 2023 onwards. 

The department states that it is exploring options for a such a model with commercial banks and other financial service providers before it will submit an application for a credit guarantee to National Treasury by the Minister of Higher Education, Science and Innovation. 

A financial analyst with actuarial experience is working with the department to support the negotiations process with banks and financial service providers. 

The department previously stated that while it explores possible loan options for students they will be mindful of the increasing student debt crisis in South Africa and the feasibility of collecting loans. 

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