State-backed loan scheme ticks all the boxes

For the government to wholly fund public higher education is seemingly impossible. But a University of Cape Town philosophy lecturer, Gregory Hull, believes a welldesigned 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 .