The debt owed to the National Student Financial Aid Scheme (NSFAS) by past students is increasing exponentially and currently stands at R35 billion Picture: Motshwari Mofokeng/African News Agency/ANA
Durban - The debt owed to the National Student Financial Aid Scheme (NSFAS) by past students is increasing exponentially and currently stands at R35 billion.

As of this month, past students owed the scheme R35bn, an increase from R20bn in December last year.

NSFAS spokesperson Kagisho Mamabolo said delays in appointing a panel of external debt collectors to service the private sector debt was one of the contributing factors to the billions of rand currently owed by past students to the scheme.

He said that the panel’s appointment was finalised recently.

“The entity has noted a stagnation in the public sector collections as it is proving to be increasingly difficult to collect from the remaining debtors since the implementation of the recoveries strategy in the 2015/16 financial year,” Mamabolo said.

He said, as per the board-approved recoveries strategy, NSFAS employed debt collectors to contact debtors to make repayment arrangements.

“The annual performance plan target to increase collections by 50% was not achieved, with the entity collecting R512.8million.

“However, this is an increase of 30.7% from the previous financial year,” said Mamabolo.

He added that there had been confusion with regard to the repayment of loans following former presi- dent Jacob Zuma’s announcement of free education as NSFAS had not received any commitment from the government to write off any outstanding student debts.

“Due to that fact, former beneficiaries are advised and required to repay their loans in terms of their loan agreement. We accept direct deposit and debit orders, which give debtors a choice of channels to pay their debt,” he said.

“We request the first payment to be a direct deposit the following payments will be processed via debit orders. This request is due to time periods to upload files to the bank,” said Mamabolo.

He added that interest on outstanding loans was charged at 80% of the repo rate, which was a substantial discount on the market rates, and interest was not charged on the outstanding balance while a student was studying and for another year after graduation or exit from university.

“There are no fixed repayment terms. Loans are only payable when a beneficiary is working and earning above R30000 per annum. Non-repayment of outstanding loans is due to unemployment, mortality, disability and other factors,” he said.

Mamabolo said the money received from past students was important as the funds were re-injected into a new budget which allowed NSFAS to fund more students.

“The success of the collections is crucial and has a huge impact on the running of the organisation and its success.”

Higher Education Department spokesperson Lunga Ngqengelele echoed Mamabolo and encouraged students to repay their loans.

“Repaying is important so that other students wanting to get into the system are able to also get qualifications and end up contributing to the country’s economy,” Ngqengelele said.

Durban University of Technology student representative council deputy president Lindani Zungu said some unemployed graduates were jobless because they could not get their degrees and diplomas as they still owed universities money.

“Sometimes students apply for the NSFAS scheme, but the entity only makes payments when those students are in their second year, which means that when they graduate they still owe institutions for their first year.

“If you show up at a job interview with a letter saying you have graduated but can’t get your diploma because you haven’t paid your fees, companies will hire the person who has their degree in their hand,” he said.

Daily News