To: Minister of Higher Education and Technology, Buti Manamela and NSFAS CEO, Waseem Carrim

Tell NSFAS to Stop Harassing Unemployed Graduates

We the undersigned, demand that NSFAS:-

Stops handing over our accounts to lawyers
Stop calling and emailing unemployed graduates
Tell us what process they follow before handing over accounts to lawyers
Pause the accrual of interest on accounts of unemployed and temporarily employed graduates

The National Student Financial Aid Scheme (NSFAS) is a public entity that provides financial assistance in the form of study loans and bursaries to students from low-income backgrounds. A student must have a plan to study or be already studying at a public Technical and Vocational Education and Training (TVET) college or a public university. Once a student has completed his or her qualification and found employment which pays R30,000 per year, she/he must pay back the loan(1). However, in South Africa, we have a problem of unemployment and short term employment. “Of the 1.2 million young people entering the labour market each year, more than 65% remain outside of employment, education, and training. Those young people who manage to access opportunities tend to zigzag on often broken pathways, falling in and out of education and short-term work so that they cannot realise their potential to participate in the economy.”(3). To address youth unemployment, programmes such as the Youth Employment Service and the Presidential Youth Employment Intervention(PYEI) were initiated. Though these programmes help, they offer short-term employment.

The PYEI, for example, is for 6 months. With people getting paid R4000. R4000 over 6 months is R24, 000, which is below the R30,000 that NSFAS says one must earn. Why then is NSFAS hounding us for payment? Does NSFAS have no way of determining whether one is employed or not? Before handing us over to its lawyers, does NSFAS confirm that we are employed? Graduate unemployment alone increased from 8.7% to 11.7% in the first quarter of this year as new graduates entered the labour force. Unemployment amongst graduates is at 24%(3). Yet every other week, we receive calls from NSFAS asking us to pay, emails from its lawyers, when we state that we are unemployed, we are asked to provide proof whilst NSFAS can verify with SARS about our economic activity. What NSFAS is doing, handing us to lawyers, is wrong.

Why is this important?

Over-indebtedness and financial vulnerability amongst South Africans is rife. “An estimated 10 million South Africans are over-indebted, with 37% of formal credit borrowers facing repayment issues.”(5). According to Debt Busters, those with a monthly net income of less than R5,000 p/m have an overoll debt-to-income ratio of 83%. Now, to charge graduates interest a year after they graduate irrespective of whether they are employed or temporarily employed, is to suffocate them with future debt. This worsens inequality as this is disproportionately affecting young, black and financially unstable youth. NSFAS is demonstrating a lack of consideration for the everyday social and economic realities of many.

A post-matric qualification is meant to lead people from low-income households to economic development, but to be assisted by NSFAS, seems to now be setting oneself up for debt. South Africa’s economy is not growing, which means there are not enough jobs being created. This has led to high levels of unemployment, which disproportionately affects young people. Yet NSFAS starts accruing interest on students’ accounts, a year after they graduate. Expecting payment from people who are dealing with unemployment and/or short term employment, handing our accounts to lawyers who hound us shows a lack of sympathy and it is punishing graduates for an issue beyond their capabilites. How much will a person who secures employment 5 years later, owe NSFAS? NSFAS is putting students in unnecessary debt and subjecting them to an endless cycle of financial insecurity.

With a budget shortfall that resulted in several students struggling to register for the second semester, NSFAS is under immense pressure to perform its role as a financial provider for students from low-income households. Three reasons for this pressure have been identified as declining real value of state allocation, increasing number of students who qualify for higher education and NSFAS and persistently low recovery loan rates. To add to these is the issue of many universities having limited capacity for generating other streams of income, which then results in universities placing the burden of the cost of higher education on the students, in the form of high tuition fees(6). Before hounding and problematising graduates who are unemployed because of the low economic growth, higher education and NSFAS should look at assisting universities with the capacity to generate income and solving issues of misgovernance, respectively.

Refrences