Johannesburg - The National Financial Aid Scheme is hounding graduates who are yet to repay their loans by chasing them with debt collectors as part of a raft of measures it uses to improve its low recovery rate.
The use of private debt collection agencies, however, has raised fears that this will place a further financial burden on the majority of graduates already facing financial problems to pay.
The Sunday Independent spoke to several former students this week who revealed details of how NFAS has been hounding them, despite some of them being only employed as interns.
One such former student is *Mandla, a former University of Johannesburg graduate who completed his Diploma in Financial Information Systems in 2016.
He expressed shock at the drastic handover of his loan to debt collectors despite being unemployed. He said this has left him helpless.
“When I signed the NSFAS contract, it was agreed that I would only start paying back the money once I started working in the same line as my studies,” said the graduate from Soweto.
“I went to NSFAS because my mother couldn't pay my fees and now to be told to ask that very parent to start paying for me was puzzling. We looked for help because we don't have the money.”
He said he further recently received an e-mail from the debtors company that showed figures of the amount owed with the interest accumulation.
Another graduate, *Zandile, claimed to have been contacted by debt collectors several times to start paying her loan regardless of being only employed as an intern.
Zandile currently earns a stipend of R2 500 to meet her immediate needs, and from that amount she was asked by debt collectors to initially pay R500 but this later changed to R250 a month.
“Because I was confused and didn't understand, I contacted the NSFAS offices to verify and was told to start paying, just as long as I received a call,” she said.
“I really don't understand why I am being summoned to pay, whereas I am not permanently employed, and the little that I get I try to support myself.”
The National Credit Regulator (NCR) said there were a few steps that need to be taken by NSFAS before handing the loans to debt collectors.
Spokesman Lebogang Selibi said these included sending a letter in terms of section 129 of National Credit Act notifying the student of the default and also advising the student to approach a debt counsellor or alternate dispute resolution agent.
“If the consumer does not respond to the notice within the required time, the credit provider can issue a summons to start the process to collect the student loan,” she said.
Katlego Motlagodisa, a student convenor, described the action by NSFAs as bordering on illegality.
“We are also puzzled as to why NSFAS is sending debt collector to student. Why can’t they administrate the process themselves because if they are sending a middle person, it means an added interest to pay,” he said.
“This is unfortunate because it is disadvantaging most of the students. If a student went to university through NSFAS, after graduating, just getting an internship NSFAS expects payments which normally disadvantages their financial abilities.”
But NSFAS spokesperson Kagisho Mamabolo said the body had registered debt collectors to assist in speeding up loan repayments. The scheme is owed R14.7-billion.
“However, only debtors who are on the SA Revenue Services list of currently employed NSFAS beneficiaries would be contacted by our debt collectors to make payment arrangements, based on their income,” he said.
“Our debtors only need to start making repayments when they earn a minimum of R30 000 per annum.
"NSFAS has not blacklisted any of our beneficiaries who still owe us money. Even beneficiaries, who have been working for many years without paying back their loans, have not been blacklisted. Our first priority has always been to make contact with our debtors and negotiate payments directly with them.”
*Not their real names