South Africa’s student debt is an intractable – long-term – challenge for all stakeholder groups: students; tertiary learning institutions and funders. While various loan models have been tried and tested in the past few years in particular, certain realities remain the same. Students need funding to access quality tertiary education. The funds must be appropriately and responsibly managed.
And, critically, students need assistance and guidance to manage their spending and debt in order to repay these loans and afford others the same opportunities.
Our country’s student debt seems insurmountable. We watch it and the frustration and desperation around it increase each year, with very little progress seemingly being made to find a lasting solution. “While the challenge is both complex and complicated, it’s important to focus on what can be done immediately in the short term to address some of the contributing factors and shift the current reality,” says Makgau Dibakwane, CEO of Fundi. “The better we understand the issues facing all parties, and the relationship between them, the sooner we can start to tackle these contributing factors and drive a collective solution.”
He believes the issue of fund management to be critical to this conversation as it speaks to the related needs of all stakeholders. “Appropriate fund management solves across these stakeholder groups. It ensures accurate, appropriate and auditable disbursement against different elements of the loan (i.e. fees; accommodation and living requirements; and books and learning resources). This means that universities and accommodation providers receive their money as per agreements with them, and that fund managers can meet reporting and delivery requirements.
It also means that students who have never had access to such vast amounts of money and aren’t familiar with how to budget – or the consequences of allocating this funding incorrectly – are guided to take the ‘right’ steps and pay who is owed what they are owed.” Dibakwane adds that fund managers like Fundi also have support systems in place for students so that they can be guided through this process as needed – again, something that has proved critical in the company’s experience.
Many of the latest fintech solutions including e-wallets are ideally suited to enable this process. “In the case of our FundiCard for example, we’re now able to offer students a completely digital e-wallet solution. It still allows the donor to allocate amounts to specific ‘pockets’ or folders so that students can spend accordingly. It’s fully encrypted and protected as per industry best practice – making it a great example of edutech in action.”
Very importantly, all transactions and spending records can be easily accessed by students to assist in their planning and budgeting each month. “As standard and ‘expected’ as this feature may be, it drives accountability and helps teach students about budgeting. Fund managers can also intervene as necessary where over or under-spending is noted.”
While student accountability is an important element in the funding equation, the flip side of this is of course that of responsible, auditable management of allocated funds. “Beyond preventing any unauthorised disbursements, the massive scale of student need means that every rand and cent allocated to education has to work even harder. Strategic fund management helps you to do this. It moves money through the system quickly and fluidly, and prevents blockages and wastage. A well-managed fund can often find smart ways to do more with less – which there is a clear need for in our current situation.”
He notes that the relationship between student success and student debt also needs to receive more collective – and constructive – attention. “For a student to have a chance of paying off their student loan, they need to succeed. Their ability to do so is once again about so much more than just money. Poor throughput rates at our tertiary institutions negatively impact all stakeholders. Lives are directly affected. This makes this a critical element of this broader conversation.”
As with so many other pressing societal needs, models involving private and public partnerships and greater collaboration could fast-track more solutions, especially in the tertiary education space. “If we’re able to depoliticise education, and focus on its ultimate intention of enabling next generations more constructive engagement would potentially result – and solutions could be found. At this stage – after so many years – a combination of solutions is clearly needed. The answer to the funding challenge is not simply ‘more money’. It’s rather finding the right combination of funding, fund management, models, systems, processes and support that enables all stakeholders to meet their objectives and the sector to deliver on the ultimate promise of education,” Dibakwane concludes.
PERSONAL FINANCE