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Escalating student debt threat to operations amidst NSFAS funding cuts

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By: The Division of Communications & Advancement

Rhodes University launches debt relief campaign

Concern is palpable at Rhodes University as the institution grapples with escalating student debt. The University is not alone in this struggle. Many others in the country face similar uncertainty following the decision by the National Student Financial Aid Scheme (NSFAS) to cap funding allowances for students.

The move has had a dire impact on students and fee-payers and has forced higher educational institutions to re-prioritise spending. Students have had to cut back even further on food and other essentials, while many will enter the working world already on the back foot with hefty debt bills.

NSFAS recently implemented several changes to its funding model, including stricter academic requirements for students to continue receiving funding. As of 2024, continuing and First-Time Entering Students (FTEN) must achieve a credit pass rate of 50% and a course credit pass mark of 60% to be eligible for funding.

Living allowances have been capped at R16 500 per annum, and accommodation fees have been restricted to R50 000 in metro areas and R41 000 in other regions per academic year. Despite being classified in the lower accommodation funding category, Rhodes University's average residence fees significantly surpass the capped amounts set by NSFAS.

The capping of funds for accommodation is hurting institutions, which are doing their utmost to mitigate the impact of the shortfall. According to Universities South Africa (USAf), student debt has accumulated over R700 million in 2023 alone. The body, representing 26 public universities in the country, says this amount reflects the difference between what universities charge students for accommodation and food compared to the amount NSFAS pays.

At Rhodes University alone, R43 million is owed to the University in outstanding student debt due to the cap in funding in only one year.

Chief Financial Officer Kamlesh Riga says 3522 of the 8156 students registered at the University for 2024 are funded by NSFAS, with 67% of students living at the university’s residences reliant on NSFAS to pay for their accommodation.  

While Rhodes University's outstanding student debt is R321 million, it is far less than the national student debt figure of R17 billion. Through various fundraising initiatives, the University aims to provide debt relief and increase student access to higher education.

The funding shortfall has led to the university cutting back on its operational spending.

 “We have a backlog in maintenance on our infrastructure that runs into billions. We normally aim to upgrade at least one residential building on campus annually. Reprioritisation of maintenance needs will now have to be performed,” said Riga.

“Funding of research equipment, new and replacement, could also drop down the priority list. If we don't have surplus funds that we can re-invest, this will affect our operations in the medium to longer term. In the long-term, the university's financial sustainability will be at risk."

Riga says that despite efforts to extend registration dates and accommodate struggling students, intake numbers have dropped this year, exacerbating an already precarious financial situation.

He says if NSFAS continues this trajectory, more young people may think twice about enrolling at university for fear of mounting bills. “No one wants to enter the work environment with thousands of rands in debt hanging over their heads.”

He says that in some cases, students may enrol at Rhodes University but be forced to consider cheap accommodation that may not support their academic success.

The University has launched a campaign, "Unlocking Futures," to alleviate student debt. The immediate goal is to raise R74 million to lessen the financial burden on current students and graduates. The University calls on corporations, alumni, and communities to support the campaign.  

BSc student Sandra Isaacs*, a 2023 bursary recipient from Rhodes University, echoed the call.

“The funding has been an absolute game-changer for me. Coming from a financially struggling home, I wouldn't have been able to pursue my dream without it. This bursary has relieved the financial burden on my family. It allowed me to focus on my studies without constantly worrying about how to pay for the tuition,” she said.

Another student, Sam Khuzwayo* said he tried his best not to worry about his student debt, even though it cast a shadow over his studies.

“My mother asked me to focus more on my academics than the financial crisis we were going through, so I concentrated on getting good grades. I sacrificed as much as I could and bought food that would just take me through the month. After I graduated, I received an internship with a stipend of R5000 a month. I spend most of the money every month on reducing my student debt,” he said.

“This is why it's so crucial for people to contribute toward initiatives like the "Unlocking Futures" campaign,” said Isaacs. “By investing in students from financially struggling backgrounds, they are not just funding an education; they are investing in the future of entire families and communities.”

As Rhodes University celebrates its 120th anniversary this year, the institution is calling on all stakeholders to rally behind the "Unlocking Futures" initiative, to empower the next generation of leaders, and to forge a path toward a brighter, more equitable future for students in need of funding.

If you want to contribute to this campaign, please use the link: /donate.

*Not their real names