By Thapelo Molefe
Student debt at South African universities has climbed to R59bn despite billions of rand spent annually through the National Student Financial Aid Scheme (NSFAS), Parliament heard on Wednesday during a briefing on the worsening financial pressures facing the higher education sector.
The debt crisis emerged during presentations by the Department of Higher Education and Training (DHET) and Universities South Africa (USAf) to Parliament’s portfolio committee on higher education.
USAf chief executive Phethiwe Matutu said nearly half the debt was linked to NSFAS-funded students.
“The major contributor to that debt are the NSFAS-funded students, contributing R29 billion,” Matutu told MPs.
She said self-funded students accounted for 44% of outstanding debt, while irrecoverable debt stood at about R12 billion.
The briefing raised questions over how universities had accumulated such high debt levels despite substantial state investment in student financial aid.
Portfolio committee chairperson Tebogo Letsie described the figures as alarming.
“Very worrying there,” Letsie said after the presentation.
“We’ll need to know how we got to that point when we discuss how NSFAS-funded students owe our institutions almost half of total debt.”
DHET officials said one of the main drivers of the crisis was the unresolved NSFAS reconciliation and close-out process between universities and the scheme, with some disputes dating back to 2017.
Universities warned that unresolved NSFAS balances were placing some institutions under pressure from auditors.
Matutu said the NSFAS accommodation cap had further deepened the crisis by leaving students liable for accommodation costs above the scheme’s limits.
Universities also cited unemployment, household financial distress, historic debt accumulation and academic exclusions as factors worsening debt levels.
Officials warned that universities had become increasingly dependent on tuition fees as government subsidies accounted for a shrinking share of institutional income.
DHET said subsidies and grants made up 43.7% of university income in 2020, falling to 36.4% by 2024, while tuition and accommodation fees increased as a proportion of university revenue.
The department said gross student debt had risen from R16.5 billion in 2020 to R24 billion in 2024 in audited figures, while impaired debt had increased to more than R15 billion.
Officials warned that nearly two-thirds of university debt was now impaired, meaning institutions believed a large portion would never be fully recovered.
Universities also told MPs that growing debt was affecting student success and graduation rates, as many students were blocked from registering for new academic years because of unpaid fees.
The sector warned that the crisis threatened the long-term sustainability of universities and was forcing some institutions to rely heavily on debt collection measures and alternative income streams.
INSIDE EDUCATION
