Cash-strapped “missing middle” students could be thrown a lifeline next year if the state agrees to provide government guarantees for commercial bank loans taken for study purposes.
This is among 18 recommendations contained in a report of a ministerial task team that investigated a comprehensive student financial aid model for South Africa.
The government offers bursaries only to students from poor and working class backgrounds, not those from emerging middle-class homes who also cannot afford tertiary fees.
To be eligible for funding from the National Student Financial Aid Scheme (NSFAS), potential students must come from families with a combined annual household income of not more than R350,000 a year. This effectively excludes tens of thousands of middle-class students.
The task team has been made appreciative of the complexities and challenges of student financing in higher education in the context of an unequal society
— Professor Chika Sehoole, University of Pretoria
NSFAS funded 691,432 students this year, including first-year students and returning students, at a cost of R49bn.
The University of Cape Town, which has a policy of not allowing returning students with outstanding debt to register for the new year, granted a concession to such students this year by allowing them to continue their studies.
At the end of last year, according to its 2021 annual report, UCT was owed R294.2m in outstanding fees.
Wits University had outstanding student debt of R950.6m at the end of last year, according to its 2021 annual report.
Higher education minister Blade Nzimande appointed a task team in June last year, headed by University of Zululand vice-chancellor Professor Xolisa Mtose, to conceptualise a new student financial aid model.
Unveiling the recommendations of the report on Friday evening, Nzimande said the task team worked in two phases, supporting immediate recommendations for the 2022 budget process and making medium to long-term recommendations. The final report was handed to him in June.
“The task team’s recommendations are under consideration by both my department and the cabinet,” he said.
Mtose’s team recommended that a comprehensive model should incorporate loan funding options for students in the missing middle and that “apart from the existing scholarships and bursaries available to these students, a fully comprehensive model must include a loan component”.
“The proposed ideal model is a wholesale lending scheme which draws on a range of funding sources and requires the establishment of an independent entity to manage the loans,” the report states.
“While this is not the most affordable model in the short term, in the long term it would allow the state to provide access funding to all students who require it.”
The report recommends that the government should plan for the phasing in of such a model over time, but that in the immediate short term, government should explore the possibility of a government guarantee for commercial bank loans “which would allow for the funding of missing middle students in particular, ideally from 2023 onwards”.
Other recommendations include:
- The department urgently investigate the possibility of targeted support from the Public Investment Corporation (PIC) for a model aimed at the children of public servants;
- Incentives be explored within the model to allow for students who complete their qualifications in the minimum time to obtain additional funding for an honours or advanced diploma qualification;
- A comprehensive (updateable) database of student funding opportunities in post-school education be developed;
- Improvements continue to be implemented to ensure academic performance criteria are strongly built into the student financial aid model;
- Caps on the allowance levels available for student accommodation be put in place and be responsive to the varying conditions and availability across different locations;
- The regulation of tuition fee increases form an important part of the development of a comprehensive funding model and be implemented; and
- Postgraduate financial aid form part of a comprehensive model for student financial aid.
Professor Chika Sehoole, dean of the education faculty at the University of Pretoria, said the recommendations were “balanced and measured”.
“The task team has been made appreciative of the complexities and challenges of student financing in higher education in the context of an unequal society. In South African society, student financing is strongly linked to the notion of access in general and equitable access in particular.”
Sehoole supported the recommendation that the state explore the possibility of providing a government guarantee for commercial bank loans for missing middle students seeking loans.
“One of the ways of addressing access for the missing middle is through access to loans from commercial banks. The government’s guarantee of those loans will facilitate access to that facility.”
Professor Elbie Henning from the University of Johannesburg’s Soweto campus said missing middle students are often the ones who drop out because of the lack of funding.
Commenting on the recommendation that government guarantees be provided to commercial banks, Professor Labby Ramrathan from the University of KwaZulu-Natal said: “It seems we are going the path of ‘global north’ practices.
“This means the beginning of student debt which will bind the student for many years post graduation.”
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