As a result of Inflation, the increased cost of living, rising tuition fees and a lack of sustainable solutions, the national student debt has gradually increased and currently stands at approximately R16.5 billion.
Not only has the 2023 academic year kicked off at higher education institutions across the country, but so have student protests and demonstrations against financial exclusions that are preventing large numbers of students from registering to further their education.
These challenging economic conditions have forced many students to drop out of university or college to pursue employment options that could help cover their student debt, leaving them with incomplete qualifications.
Paulvia Shiburi, who is a Student Debt Specialist says that student debt has become such a huge problem and challenge that many parents are forced to apply for debt counselling because of the student loans they have taken out on behalf of their children.
She adds, “At this point we have a number of students that still cannot pay back the money they were given to further their studies, they are still struggling to pay that back.”
Shiburi explains that depending on the type of student loan that was taken out, whether it was with a banking institution or funds from the government, it has to be paid back either whilst the student is still completing their qualification or once they’ve finished their studies and have entered the labour market.
“As we know that the unemployment rate is very high in South Africa, so you’ll find that that a number of students are still unable to pay back their debt," she adds.
Shiburi says there are consequences on defaulting a student loan but depending on who granted the loan, some sort of legal action will be taken so that the loan provider can recover as much money as possible.
Meanwhile, students have pleaded with the Department of Higher Education to find adequate solutions to help combat the challenges many are facing with regards to student debt, particulary students who form part of the missing middle.
During his state of readiness address, Higher Education Minister Blade Nzimande, stated that his department was working toward developing an alternative funding model for university and technical vocational education and training (TVET) college students.
The minister further highlighted 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.
Nzimande noted 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.
