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UDM: Contingency loan model will create debt-trapped students

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UDM: Contingency loan model will create debt-trapped students

Photo by Reuters

14th November 2017

By: News24Wire


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The United Democratic Movement (UDM) has rejected a Fees Commission recommendation that income contingency loans (ICL) be adopted as a funding model for students, saying it will create an army of debt-trapped graduates who have not even had an opportunity to earn an income.

"This commodifies education," UDM chief whip Nqabayomzi Kwankwa said in a statement.


"South Africa’s unscrupulous banks will be cash flushed by charging students exorbitant fees and interest rates on risk-free loans that are fully backed up by government guarantees."

President Jacob Zuma on Monday released the fees report – more than two months after he received it.


While speculation was rife that he intended to find R40-billion in the budget to fund free higher education next year, the report stated that South Africa can't afford it.

Kwankwa said the UDM welcomed the commission’s recommendation that more resources be allocated to the Vocational Education and Training Colleges (TVET) sector, but the party was "concerned that throwing money at the problem without addressing the structural challenges facing this sector will compound the problem".

"South Africa needs to redefine this sector and reposition it so that it is able to respond to labour market demands whilst contributing to economic growth," Kwankwa said.

"We agree that the early childhood development (ECD) sector is the missing link in the current education system and much more must be done to integrate it into the mainstream education system, with very clear goals and objectives."

Lack of clarity

The UDM didn't find any "concrete solution" from the report and said it was disappointed that it took the Presidency more than two months to release it, without a clear policy position.

"These delaying tactics are an indication that the Presidency is using education as a pawn in the political factional battles of the ruling party in the run-up to its elective congress in December," said Kwankwa.

"The UDM believes that government should fund fee-free, quality education by downsizing its executive, putting an end to the ever-increasing wasteful, irregular and fruitless expenditure, closing the tap on illicit financial flows and increasing corporate income tax, among others."

Meanwhile, the Democratic Alliance (DA) wrote to Speaker Baleka Mbete to ask for an urgent debate of national importance on the report.

"The release of the long-awaited document has not been enough to calm the fears and anxieties of students, their families and higher learning institutions," DA MP Belinda Bozzoli said in a statement.

"Universities have been unable to set next year’s fees as they had been waiting for the president to release it, while students remained in the dark with regards to whether they would be able to study next year."

She said the uncertainty was exacerbated "by the bizarre rumours about an alternative funding model, allegedly backed by President Zuma himself, that seeks to finance higher education through the slashing of social grants and increasing VAT".

An urgent debate will provide clarity, she added.


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