Student debt projected to increase by R1.2 billion this year

AT A TIME when the cost of living is at an all-time high, mounting levels of student debt are causing significant concern, as the total amount owed is predicted to rise by R1.2 billion this year.

According to Universities South Africa (USAf), student debt from 2018-2020 increased from R11.3 billion to R13.162 billion, before rocketing to R16.5 billion in 2020-2021.

A student, who wished to remain anonymous, said that before dropping out of her language and culture degree at a South African university, she tried her best to pay off the debt with a part-time job, but the mounting debt took a toll on her until she was unable to pursue her dream.

“It is horrible. Most of us dream to step into university as soon as we're done with secondary school but sometimes our financial background does not compensate for that dream,” said the student.

“There was a time I felt I would not succeed in life without further education. I believed that with this extra knowledge I would be able to leave a footprint in the working world and without it I would have to fall into line with all of the others who have had to give up their dream and settle for a job that they never truly wanted.

“I watched all of my friends attend university and felt as if my journey was just filled with problems. Eventually, before I dropped out, I started working as a waitress to make additional money that could help me pay my school fees but the job required me to be there even though the pay was covering less of my school fees than I had expected. I was crushed and literally gave up on my university dream.”

With challenging economic conditions, the director for operations and sector support at USAf, Linda Meyer, said that the percentage debt ratio owed by students to universities is increasing annually, with roughly half of the fee-paying students (excluding NSFAS-sponsored students) facing some form of financial difficulty in meeting their obligations.

“Approximately 50% of students in public universities are NSFAS beneficiary students that the government financially supports and who come from struggling working-class families. With challenging economic conditions, some students and their families are exposed to several financial challenges they may not have anticipated," said Meyer.

With high unemployment rates, rising inflation and increasing electricity prices, Waldo Krugell, an economics professor at North-West University, said that the rising cost of living was putting pressure on students, and the government's fiscal discipline meant that universities couldn’t just write off the debt.

"Students are mainly in debt to universities, but many also have debt in the form of student loans at banks. The simple reason is that the cost of living and the cost of higher education have escalated and few families can afford to pay for them out of pocket.

“Financial support in the form of bursaries and scholarships gets students into university, but this is not enough to pay for everything, and as a result, many students fall behind on their fees.

“Also, it is not easy to supplement their income with a part-time job. With South Africa's high unemployment rate, particularly among young people, there is a lot of competition for the few jobs that are available," said Krugell.

Department of Higher Education and Training spokesperson Ishmael Mnisi said that the department was concerned about student debt, particularly among students from poor and working-class backgrounds; but public funds were constrained and there was no possibility of government eradicating the debt of non-NSFAS students.

"In principle, the sector, together with the government, agrees that students will have to pay their fees to be managed through the possibility of payment plans for those students who do not meet NSFAS requirements but are still financially needy.

“DHET does not support the writing off of historic debt as this would affect the sustainability of institutions. All institutions have told the department that they have systems in place to make sure that students with debt can get certificates of completion so they can continue their education or get a job.

Mnisi added: "Going forward, a longer-term solution lies in improved funding opportunities for the 'missing middle' students and the development of a comprehensive, sustainable and universal financial aid solution that should also address student debt as well as funding for postgraduate students.

“The Ministerial Task Team to support the work of the Department of Higher Education and Training, NSFAS and National Treasury in its critical work to conceptualise a new student financial aid model for the South African higher education and training system has submitted its final report to the minister. The report and recommendations will be tabled in Cabinet for consideration once the minister has considered all options," said Mnisi.