Sizwe Nxasana: Proposed contingency loan model may hamper poorer students

President Jacob Zuma released the highly-anticipated 700-page document on Monday which suggests that R50 billion should be poured into the expansion and development of Technical Vocational Education and Training (TVET) institutions.

The report recommended establishing a cost-sharing model between the state and commercial banks to fund university students. This model would see the National Student Financial Aid Scheme (Nsfas) being replaced by a new income-contingent loan system.

Sizwe Nxasana, the chairperson of Ikusasa Student Financial Aid Programme (ISFAP) spoke to Bongani Bingwa host of the Afternoon Drive show on 702 on the feasibility of the report's findings.

He says there a few recommendations he supports such as the additional funding proposed for TVET colleges as well as the need to increase funding towards historically disadvantaged universities.

The recommendations I have a difficulty with are the proposed income contingent loans.

Sizwe Nxasana, the Chairperson of Ikusasa Student Financial Aid Programme (ISFAP)

Even though the recommendations speak of a cost sharing model, it also contradicts itself because those loans would be guaranteed by government.

Sizwe Nxasana, the Chairperson of Ikusasa Student Financial Aid Programme (ISFAP)

I don't think the state will have the capacity to guarantee that all loans are available to students for a while explains Nxasana.

The other is that all these loans would be available to all students including those who can afford. Now it has been proven many times in different countries that those who are likely to afford these loans and apply may crowd out poorer students.

Sizwe Nxasana, the Chairperson of Ikusasa Student Financial Aid Programme (ISFAP)

With the drop rates being higher, you may even end up with anti-selection environment where banks may feel more inclined to approve these contingency loans to the working class students, leaving the poor out in the cold adds Nxasana.

Sizwe Nxasana is also the National Student Financial Aid Scheme (NSFAS) chairperson

For more of Nxasana's analysis on the Hefer commission of inquiry into Higher Education and Training fees click on audio below:


This article first appeared on 702 : Sizwe Nxasana: Proposed contingency loan model may hamper poorer students


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