Do the research first: Your student loan repayments should not burden you with lifelong debt
The cost of tertiary education is on the rise, and while the National Student Financial Aid Scheme (NSFAS) provides interest-free loans to economically disadvantaged students, these loans still need to be repaid. To address this issue, both the private and public sectors are working on strategies to support South African students. These challenges were discussed recently in a webinar hosted by the Mail & Guardian, African Bank and Fundi.
The webinar was preceded by the launch of the Fundi and African Bank Student Funding Insights Report, which delves into some of the issues that were addressed at the online event.
In her opening address, Mikateko Chauke, Head of Strategic Communications and PR at African Bank, emphasised that student protests at the beginning of the year highlighted the financial difficulties students face in managing their study expenses. She stressed the importance of financial discipline and literacy for students, as their limited knowledge in financial matters often leads to overspending, compounded by late payments, financial exclusion, and the concept of the “missing middle”. The landscape of student loans in South Africa is primarily dominated by loans from government institutions such as NSFAS, with R47 billion allocated to 900 000 students this year. NSFAS loans are interest-free, while loans from private institutions come with higher interest rates.
Tuition fees, study materials, accommodation, and general living expenses are some of the costs students have to bear. Tuition fees vary across institutions, with public universities generally charging lower fees ranging from R50,000 to R150,000. Chauke stressed that financial planning empowers students to manage their budget, reduce debt, develop sound financial habits, create emergency funds, invest in their future and achieve financial independence.
Chauke concluded by emphasising that while student loans can be a valuable tool to help students achieve their career aspirations, students must also be responsible borrowers. Thorough research on loan options and lenders is essential, and engaging the borrower by asking pertinent questions is a must do, as repayments should not burden students with lifelong debt.
The moderator, Thembikile Mrototo, highlighted the issue of the missing middle, where some students have financial circumstances that do not fit into the criteria for loans.
Mxolisi Manana, UJ SRC President 2023, pointed out that loan repayment difficulties extend to students in the TVET sector as well. The challenges are complex, including uncertainty about loan continuance from one academic year to the next. Efforts are being made by the private sector, universities, and the government to address these issues.
Professor Peter Mbati, Vice Chancellor of Sefako Makgatho Health Sciences University, concurred that the government has made substantial commitments to address these challenges. He emphasised the importance of supporting future generations by giving back to the system for those who have been supported by NSFAS.
While NSFAS does not fund students for additional undergraduate degrees, other funding institutions can assist, especially for degrees in scarce skills areas. Some universities also offer scholarships, albeit to a limited number of top-performing students. Efforts are made to accommodate as many students as possible on campus to alleviate accommodation challenges.
Mary Maponya, Executive Head of Lending at Fundi, shared that Fundi is actively engaging with students and universities to address funding gaps for the “missing middle”. Fundi is developing products to make loan repayments more affordable and continuously seeks new ways to support students and universities. Permanent employment is a crucial criterion for obtaining a Fundi loan.
Mbati and Manana both emphasised the need for transparent communication between the private and public sectors to achieve sustainable funding solutions for higher education.
In conclusion, all participants agreed that quality education should not be denied to anyone who qualifies for tertiary studies. Efforts are being made to address the challenges related to student loans, accommodation, and funding, with the ultimate goal of providing access to higher education for all deserving students.
To access the Fundi and African Bank Student Funding Insights Report, visit: https://fundiconnect.co.za/student-funding-insights-report/