Student debt could lead to global financial crisis, Manamela warns

Some students have been locked out of their universities for the 2021 academic year over historical debt, sparking protests at some campuses across the country. 

This includes the Wits protests which have subsequently spread to other institutions.

Student leaders at some institutions have deadlocked in their negotiations with management. 

Since the start of the protests the department has told students that its hands are tied, despite its earlier promises to make free education a reality. 

“The challenges that I think are consistently brought forward, why South Africa cannot immediately provide universal free education for both universities and TVET colleges, has mainly been around fiscal constraints and limitations that we have,” Manamela told a higher education panel on Wednesday evening.  

“Put differently, not enough resources are prioritised by the state through it’s budgeting system to provide for fee-free higher education. That’s the argument that has consistently been made.”  

But Manamela believes there’s more to the problem.  

“I think that argument on its own is not sufficient. I think we need to tackle it because it’s more about us placing education as a priority and the skills-needs of our country as a priority. 

“The question of the willingness of increasing, for example, education expenditure to be equal to 1 percent of our GDP, which will basically meet the minimum fiscal requirements for us to provide fee-free higher education,” he added. 

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He estimated the national student debt to be above R13 billion. 

“At the centre of the current crisis for instance is the debt that has been accumulated by the missing-middle. 

“That’s probably at the crux of the current issue. Yes, there are other issues but the whole issue of accrued debt, which amounts to anything up to R13 billion and affects hundreds-of-thousands of students in our universities in particular who are associated with or is part of this missing middle,” he explained.  

He warned student debt could drive a global financial crisis. 

“Student debt globally is growing and in fact there are projections that the next financial crisis would be at the back of the student debt, particularly in the US.

“In our country it has also been growing and as I said because of diminishing household incomes, higher unemployment rate, the issues around inequality and all of that,” said Manamela.  

He vowed to go back to the drawing board to help find more sustainable solutions to the student debt crisis.