Studies show that the average cost for the first year of a university degree in South Africa costs approximately R62,000 and more.
The cost of higher education has become a major challenge in South Africa, with many students having to take out loans at exorbitant interest rates in an effort to pay for their tertiary education.
The "missing middle" refers to students who come from working-class households, whose income bracket is too high to qualify for government funding while at the same time, not high enough to afford higher education.
During a written parliamentary Q&A this week, the Department of Higher Education and Training (DHET) was asked whether the private sector, particularly private banks, would be approached to provide loans to ‘missing middle’ students to fund their studies.
In response, Minister Blade Nzimande said that the department has not entered into any agreements with the banking sector to provide loans to missing middle students, however, there have been engagements with banks about the possibility of a new loan scheme supported by government guarantees.
Further concerns were raised on whether there have been any feasibility studies done on the impact of loans as a method to fund students, and which measures the department plans on taking to ensure that loans will not create massive debt traps for students.
The minister said that issues relating to the feasibility of loans were explored in earlier work conducted by the department, particularly by a Ministerial Task Team (MTT).
The work of this MTT reviewed previous policy advice provided to government and the findings and recommendations from the study are currently under further discussion by the department, added Nzimande.
“In addition, the report reflected on the findings of the Heher Judicial Commission on the funding of higher education, which included recommendations for an income-contingent loan model, which would include the tax-collection authority.”
Nzimande said that when investigating a possible future loan model for missing middle students, the department will be mindful of the student debt situation and the feasibility of collecting loans.
