Nzimande unveils student loan scheme for missing middle

The department of higher education & training can fund under half of the estimated 68,446 students from the missing middle category this year, Minister Blade Nzimande said in Tshwane on Sunday.

He said the first phase of the funding model will start this year. The missing middle are students who come from homes whose annual household income is between R350,000 and R600,000.

Previously, the National Student Financial Aid Scheme (NSFAS) fund students from homes that had an annual income of less than R350,000. However, it intended to change this through a new funding model. Nzimande said they had budgeted R3,8bn to fund the new loan scheme 

“Government has committed the initial capitalisation fund totalling R3.8bn to support the loan scheme in 2024. This amount comprises R1.5bn from the National Skills Fund and Training Authorities [SETAs]. This amount will cover 47% of the estimated 68,446 missing middle school students – that is, 31,884 of the 68,446 missing middle students,” he said.

The scheme is expected to implement its second phase in 2025, and it is estimated that R4.2bn will be required annually to fund these students. It is for undergraduate and postgraduate students from public universities and colleges across SA . The students must sign a loan agreement.

Nzimande said the loan was expected to fund 70% of students studying science, maths and technology programmes, while 30% would be from humanities programmes.

“Students will be supported for tuition, learning material and accommodation, and students who get above 70% on average and within the prescribed time will get a 50% reduction [in loan repayments].”

Meanwhile, Nzimande confirmed that the department has approved a 4.5% tuition fee increase for university which will only start, in 2025.

“Everything increases with inflation and the institution increases its price to help provide quality education. What we do is set a cap. This is to ensure that NSFAS does not collapse.”

NSFAS spokesperson Ishmael Mnisi said the fund would continue with the direct payment scheme. This follows last year’s decision to cancel the contracts it had with four fintech companies over corruption allegations. 

“The direct payment scheme is an effective way to ensure that we pay our beneficiaries. We will have new bidders to provide the service,” he said.

Members of ActionSA demonstrated outside Tshemedisong building calling on Nzimande to resign over “poor” management of NSFAS at the media briefing.

“It is embarrassing that the minister is here to tell us about the state of readiness for the 2024 academic year while some students were not paid in the last year. We are saying to the minister, fix last year’s problem before addressing the state of readiness for this year. And while you are on it, tender your resignation as well,” said Hluphi Gafane, ActionSA National Youth Forum chairperson.

Gafane said the new loan scheme would reach its grave before implementation.

“The system will fail like the direct payment system. The new funding scheme was not discussed with students and it does not meet the needs of the students, so it is set to fail,” she said.