The issue of financial exclusions has prevented thousands of students from continuing their qualifications or graduating, particularly students who form part of the “missing middle”.
The missing middle refers to those students who come from working-class households that do not qualify for government funding while at the same time, cannot afford higher education.
Responding to a recent parliamentary Q&A, Higher Education and Training Minister Blade Nzimande said his department was engaging with commercial banks and other financial service providers regarding a loan scheme that will finance missing middle students.
“It should also be noted that the work to find a long-term solution to missing middle student funding needs is ongoing," noted the minister.
Nzimande explained that the decision to engage with the banking sector follows recommendations of the Ministerial Task Team he instructed to conceptualise a new student comprehensive financial aid model for the South African Higher Education and Training System.
He said the MTT explored different loan models, including a direct lending model, wholesale lending model and credit guarantees.
In conclusion, the MTT recommended that in the immediate short-term government should explore the possibility of a government guarantee for commercial bank loans.
The Department is currently engaging with the banking sector to explore the options for a credit guarantee model with the commercial banks and other financial service providers before an application for a credit guarantee can be submitted to National Treasury by the Minister.
Nzimande said that this would allow for the funding of missing middle students and test the take-up of such loans while other loan models are explored from 2023 onwards.
“It is envisaged that the final model will be tabled before the Forum of South African Directors-General (DG cluster) before it is submitted to Cabinet within the next month or two.”
Furthermore, he also noted that various consultations with universities, the South African Union of Students and the National Student Financial Aid Scheme were held to discuss and address the issue of financial exclusions and historic debt of academically deserving students.
Nzimande said his department has also embarked on oversight visits to all 26 universities over this period, to determine plans that universities have put in place to assist unfunded students that are unable to register.
"Most universities have initiated processes and concessions to assist academically deserving students," said the minister.
Some of the plans and concessions that have been put in place to help academically deserving students include, merit bursaries, missing middle campaigns, funds raised by the SRC and other fundraising initiatives.
