Student aid scheme running on empty, R300m written off

Student aid scheme running on empty, R300m written off

20 October, 2015 06:40

University students. File photo.

Failure by students and graduates to repay loans totalling hundreds of millions of rands has left the National Student Financial Aid Scheme "critically challenged".

The scheme's collections on its loans to over 400,000 students at universities and technical colleges has dropped by almost R100-million in a year.

The 2014-2015 annual report of the scheme shows collections fell from R338.8-million in 2014 to R247.5-million this year.

Compounding the problem is that, according to the report, R285.6-million owed by 11,700 debtors "who are reported to be deceased" was written off by the scheme.

The scheme states that the repayment of loans would "go a long way to assist existing students".

The failure of students and graduates to repay their loans - which are used for registration fees, books and accommodation - forms a backdrop to the shutting of universities across South Africa yesterday as thousands of students protested about proposed fee increases.

Wits University until last week proposed a 10.5% fee increase and the University of Cape Town 10.3%.

In the 2014 academic year the scheme provided over R9-billion in financial aid to 414,802 students, 186,150 at universities and 228,642 at technical colleges.

The government increased its contribution to the financial aid scheme by R29-million, bringing its contributions to R116-million.

Higher Education and Training Minister Blade Nzimande, in the scheme's annual report, says that, despite the "considerable investment" in financial aid, the state was unable to meet the needs of all qualifying and deserving students.

"Insufficient student financial aid is a contributing factor that impedes equitable access to university education and undermines government's efforts to respond to the socio-economic inequalities and challenges the country faces.

"We also have to look at university fees as they are increasing at a higher rate than [the financial aid scheme's] funds."

The highest university registration fees are at:

UCT, R24,000;
Rhodes, R19,200;
University of the Free State, R12,980; and
Wits, R9,350.

Nzimande said he had told the aid scheme to look at "creative mechanisms" for sourcing additional funding and to increase the "efficiencies and systems" of collection of loan repayments from students who have benefited and found gainful employment.

"While the government will need to source additional resources . beneficiaries of the scheme and the private sector need to invest in our youth as well."

The scheme in its report states that one of its "critical challenges" is to maximise recovery of overdue loans from eligible debtors employed in either the formal or informal sectors of the economy.

"We have not met our target to increase the amount of funds recovered. This was largely attributed to the inability of the system to produce and send statements to debtors, which affected the ability of the organisation to collect outstanding debt," says the report
.