State-backed loan scheme ticks all boxes

The search is still on for a viable higher education funding system. (Photo: Sebabatso Mosamo, M&G)

The search is still on for a viable higher education funding system. (Photo: Sebabatso Mosamo, M&G)

But a University of Cape Town philosophy lecturer, Gregory Hull, believes a well-designed student loan scheme could be the solution, according to The Conversation this week.

A government-backed credit model — buy now, pay later — is well suited to financing higher education. “If managed correctly, it could deliver increased access, fiscal fairness and academic excellence more effectively than other funding options,” he said.

It can achieve four important policy goals simultaneously: fiscal fairness, higher education expansion, efficiency driven by price and increased access, Hull said.

Education researcher Nic Spaull also says the most reasonable and workable solution is a loan scheme, as proposed by education economist Professor Servaas van den Berg at Stellenbosch University.

The idea is that banks provide government-backed grant loans to students, Spaull writes on his website. “It would be a grant that converts into a loan if a student successfully completes their degree and starts earning a decent income.
It would still require a huge amount of government finance to provide the surety to banks for students who come from households that earn less than R500 000 (or some threshold).

“But, unlike with totally ‘free’ education, the students who do successfully complete their degrees would ‘pay it forward’.”

Hull said most people who complete an undergraduate degree are guaranteed employment and high lifetime earnings . — Lisa Steyn

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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