Income-contingent loan model opens the way to deal with missing middle - Bawa

There are concerns that the Fees Commission report leaves more questions than answers, as President Jacob Zuma has not made a pronouncement on the report.

The Commission finds that universally free higher education in the country is not viable.

According to the Fees Commission, the funding schemes for higher education are inequitable, inadequate and unsustainable.

The Commission recommends that the National Student Financial Aid Scheme (NSFAS) be replaced at universities by Income-Contingency Loans sourced from commercial banks, with NSFAS only funding students at Technical Vocational Education and Training (TVET) Colleges.

Stephen Grootes spoke to CEO at Universities South Africa Professor Ahmed Bawa and Sizwe Nxasana who is the National Student Financial Aid Scheme (NSFAS) chairperson.

Bawa says the income-contingent loan model opens the way to deal with missing middle.

It really opens the way for us to deal with the entire student body, not just with those students who fall into the poorest bracket.

Ahmed Bawa, CEO at Universities South Africa

The big challenge for us is that it is not in line with the political demand for free education.

Ahmed Bawa, CEO at Universities South Africa

Nxasana says however the proposed contingency loans is not a practical way of solving the student finding problem.

There just isn't that capacity in treasury to guarantee all loans that will be issued to students. The issue really is as a bank you don't just issue loans when you know there are going to be defaults....

Sizwe Nxasana, National Student Financial Aid Scheme (NSFAS) chairperson

READ: Banks can't lend money without expecting it back: Fees Report

We have made proposals which show that the country can afford to provide free education to the poor by making sure that the allocations from the fiscus as well as leveraging private sector finding that comes from contributions that would for instance be leverage from triple BEE schemes, philanthropies and foundations......

Sizwe Nxasana, National Student Financial Aid Scheme (NSFAS) chairperson

And for the working class students a combination of grants and some income contingent loans that will be made available by this partnership between NSFAS and the private sector.

Sizwe Nxasana, National Student Financial Aid Scheme (NSFAS) chairperson

Click on the link below to listen to the full audio....


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