What The Government Plans To Do About The Student Debt Crisis



Student debt is a challenge that has plagued South African students for decades, and each year it only seems to increase. This issue is placing a large strain on the South African economy and costing the Government and the Higher Education sector billions. 



Student debt problems in the country persist, and over the past decade figures have seen an annual increase of an estimated R2 billion. There has been an exponential increase since the 2019/20 financial year, with the number growing from R13,1 billion to R16,5 billion in the 2021/22 financial year.

Without intervention, the problem of student debt will only become more severe each financial year, and more students will be forced to choose between their futures or dealing with a lifetime of debt.

The cost of receiving a tertiary education in South Africa has increased significantly in recent years. This, combined with inflation, the rising cost of living and limited funding from the Department, is costing the Government billions that could be allocated elsewhere.

Questions are now being raised about what is being done to prevent this issue from skyrocketing. The Minister of Higher Education, Science and Innovation, Blade Nzimande, has responded in a written statement from Parliament. 

What is government doing about student debt?

The Government contributed R1.7 billion to the National Student Financial Aid Scheme (NSFAS) in 2018. This was done as part of a due diligence exercise to contribute towards the historic debt owed to universities by continuing or returning NSFAS qualifying students.

These funds were allocated to students who were subject to the R122 000 family income threshold and the NSFAS funding cap. This applies to students who registered in 2019, 2020 and 2021.

Students had to meet the academic progression requirements for the years they are claiming for and were required to sign an acknowledgement of debt form for their institutions. This project is ongoing and is subject to an audit process required by NSFAS which is yet to be finalised.

Since the 2022 academic year, NSFAS applied a household income threshold of R350 000 to students who applied for NSFAS funding in 2022 and beyond. Therefore, continuing students who were subjected to the R122 000 threshold and NSFAS funding cap, qualified for the full cost of study so this would not result in debt. 

There have also been discussions between the Department of Higher Education and Training (DHET) and respective universities to ensure that fees remain affordable for lower-income, working-class and missing middle students who wish to further their education. 

Last year, a formal agreement was reached with universities to increase tuition and accommodation fees to a maximum Consumer Price Index (CPI) of 4.23% for tuition fees and CPI+2 to a maximum of 6.23% for accommodation fees.

For the 2023 academic year, NSFAS has an allocation of R38.6 billion for universities. Approximately 62% of this is covering undergraduate students studying towards an approved qualification at an institution, and who meet the relevant qualifying criteria. The Minister has also approved the 10% increase in NSFAS allowances. 

This problem will only continue to place pressure on the South African economy and poses a real threat to the sustainability of our Higher Education institutions if the Department does not develop affordable and tangible solutions to ensure that this number will not grow further in coming years. 

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Student debt currently stands at R16.5 billion, making it a burden that weighs heavily on both students and institutions of higher learning. As it continues to be on the increase, a solution that will work for those affected is much needed at this point in time.





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