Govt unveils R3.8 billion loan scheme for ‘Missing Middle’ students

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The government has announced a R3.8 billion loan scheme for the missing middle category of students at universities and T-VET colleges.

Higher Education, Science and Technology Minister Dr Blade Nzimande made the announcement in Pretoria on Sunday.

The “missing middle” refers to students whose annual combined family income is between R350 000 and R600 000 and do qualify to be funded by the National Student Financial Aid Scheme.

Nzimande has described the announcement of the missing middle loan scheme as an important milestone. He says the loan scheme will be administered and managed by NSFAS, but it will look for support to enhance its capacity to disburse the loans.

“We are working really towards breaking this repeat, year in, year out demand for funding. This going to go a long way to actually address that from 2024.”

Nzimande says the implementation of the scheme will be divided into two phases. The first phase commences this year.

“We have committed as government the initial capitalisation fund totaling R3.8billion rand to support the loan scheme in 2024 for the missing middle. R3.8 billion, this amount comprises R1.5 billion from the national skills fund and R2.3 billion from SETA’s. This amount we estimate will fund 47 percent of the missing middle students, that is 31 884 in terms of our estimate of the estimated 68 446 students in the missing middle category, so this is going to fund half immediately.

Students who will be funded must be willing to sign a loan agreement and will be able to apply for a loan in any year of study. but that’s not all.

“Students are expected to get a 60% pass rate on average to continue being funded. Students will be supported for tuition, learning material and accommodation, that’s what this scheme is going to be funding, Students who obtain 70% or above on average and finish within the prescribed time will receive a 50% reduction of the loan on request, in other words, if you finish on record time, 50% of the loan will be converted into a bursary. You’ll only be expected when you start worrying to only pay back the other 50 percent.”

This announcement has been given a thumbs up seen as a step in the right direction

Miyelwani Mkhabela from Antswisa Management Group, says parents have to be responsible and the students directly have to be responsible to make sure that they meet the criteria that are stipulated by the department.

SAUS’s Mcolisi Ngcamphalala says, on average, students will spend most R1200 per annum for their fees at varsities and other things, so it becomes difficult for the parents to sustain that and as a result these students, are finding themselves without funding and most of them they’ve had to drop out, and even as we speak about the student debt.

Many of those who have debt actually come from this missing middle because they are unable to service that debt. Even when it comes to registration they are told to settle the previous debt before being registered.

Even the accommodation that they are forced to stay in sometimes does not meet the requirements that we are expecting from service providers. They rent back rooms which are unconducive for them to study and they have not been doing well because of the same problem.

Meanwhile, outside where the minister was briefing the media, the political party Action SA protested calling for him to step down.

Earlier in the week, the party filed criminal charges against Minister Nzimande, and National Student Financial Aid Scheme (NSFAS) Board Chairperson, Ernest Khosa, for contravening the Prevention and Combating Of Corrupt Activities Act. This they said is in response to the allegations that the Minister and Board Chairperson were involved in a fraudulent scheme orchestrated to loot NSFAS.

Hlupi Gafanae, Action SA Youth forum says the purpose of the picket is to tell the minister that there’s no way that that Nzimande can claim they are ready for the academic year. “He has still not accounted for and fixed what was broken in 2023. Students have still not received their allowance and parents are still in debt.”