Loans proposed as way to fund higher education
A PROPOSAL to replace the National Student Financial Aid Scheme (NSFAS) has been met with mixed emotions as the country waits on President Jacob Zuma to make the final pronouncement on ways to make free education a reality.
This follows the release of the report of the commission headed by Judge Jonathan Heher on the feasibility of free higher education earlier this week.
The report made several recommendations, but in essence stated that the government cannot afford to provide free education for all.
The one recommendation that has struck a nerve is that of replacing the NSFAS with an income contingency loan system which would allow the banking sector to provide student loans which are guaranteed by the government.
In terms of the proposed system, students will apply for bank loans and will have to pay them back once they start earning a certain amount of money.
The proposal has been frowned upon by some and referred to as a system that will enslave poorer students to debts.
Economist Dawie Roodt said the proposed system could be a better way to go as banks had a loan-recovery mechanism that is far superior to that of the NSAFAS.
“It will be quite beneficial for the banks, they will make money out of this whole process and they will not lose money because there is a guarantee behind it. I think it will be good for the banks, we will get rid of the administration that is NSFAS, which has not been effective or efficient. The only loser will be the taxpayer who will stand in for loans,” he said.
NSFAS chief executive officer Steven Zwane said they would wait for Zuma to make the final decision on the way forward after receiving recommendations from the interministerial committee to looked into the funding model for higher education.
The NSFAS received 150 000 applications for funding already and is expecting 100 000 more.
Nkosazana Dlamini Zuma