Student debt is a major issue in South Africa with the latest figures coming to over R16 billion. A major contributing factor to this is the missing middle, those who are labelled as 'too rich for Nsfas' but are unable to afford to pay their fees without any financial aid.
The Department of Higher Education has however said that they are consulting with stakeholders to find a solution to historic debt and a gap in funding. One possibility the department is looking at is a loan scheme.
Answering a question for parliament, the Department of Higher Education has said:
The Department of Higher Education and Training has embarked on further consultations with the banking sector as well as the Banking Association of South Africa (BASA) to explore options for a credit guarantee model before an application for a credit guarantee can be submitted to National Treasury by the Minister of Higher Education, Science and Innovation.
Engagements on this loan scheme commenced on 21 February 2023 as BASA and Nedbank informed the department on requirements for the possible loan scheme. These engagements will continue with other banks in the country joining.
In January, while speaking on his department's readiness for the 2023 academic year, Minister Blade Nzimande said that the issue of the missing middle is being finalized within the new Comprehensive Funding Model which is expected to be introduced before the end of the new financial year.
In order to assist missing middle students, Nzimande says that within the new policy framework his department will avail loans and bursaries and direct these efforts toward students located within the scarce skills categories.
We have got a report now of the ministerial task team and we're just concluding consultations on that, with the aim of going back to cabinet to hopefully adopt a comprehensive student funding model on that by the end of the current financial year or not very late in the new financial year.
Universities South Africa, Chief Executive Officer, Dr Phethiwe Matutu has also previously commented that the extent of student debt threatens the future sustainability of Higher Education Insititutions.
