Cosatu calls for student debt to be scrapped amid ‘Covid-19 economic fallout’

The Congress of South African Trade Unions (Cosatu) has called on government to support the push for the cancellation of student debt for workers and graduates who remain saddled with historical liabilities relating to the funding of their education.

“A disproportionate number of young workers that enter the labour market are heavily indebted with historical debt largely acquired through student loans.

“In South Africa, a large number of workers support extended family structures, due to the inadequate social security nets, and are thus caught in a permanent debt trap because of this historical debt,” the federation said in a statement on Wednesday.

Cosatu said it wants to see institutions of higher learning cancelling the academic loans for new workers entering the labour market and graduates that were sitting at home.

The federation said the Covid-19 lockdown had deepened the financial stress that is faced by many workers who have impaired credit records and were unable to repay their debts on time.

“Some of these workers risk losing their jobs, have their wages reduced and their possessions like cars and houses repossessed.

“Young workers who will be displaced from their jobs due to harsh retrenchment principles of last-in and first-out  will struggle to find jobs in a depressed global economy.

“Many young people will seek self-employment opportunities and require seed capital which cannot be accessed if young workers carry historical student debt, further perpetuating the vicious cycle of poverty that many black young people fall victim to as a result of the historical legacy of Apartheid.

“Most people took this debt not out of choice, but because they did not have any other available options,” it said.

Cosatu further said that South Africa’s monopolised economy imposes a high cost of living on the working class, which meant that some people needed to supplement their “meagre or slave wages” with debt in order to afford to pay for their kids’ education.

“Cancelling student debt is the right thing to do because it will not only give relief to these workers and graduates but it will be righting the wrongs of the past. For a long time lack of financial resources has been used as a form of exclusion.

“The main thrust of transformation is to ensure that adequate resources are made available to historically disadvantaged social groups, and this means forgiving the student debt. This debt perpetuates the inequalities and apartheid separate development.

“This is also having an impact on the economy because it means most of the income is used to survive debt, therefore, reducing the purchasing power of many workers,” it added.

The federation said graduate unemployment in South Africa remains very high, especially among black South Africans.

“This is the reason why forgiving student debt is important because it will allow these unemployed graduates to explore other ways of earning a living without an albatross around their necks,” it concluded.

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