Writing off historic debt would collapse universities, says Jansen

The demon of historic student debt will rear its ugly head each year until a permanent solution is found, with experts proposing that at least 50% of student debt be covered by the fiscus.

At the University of Witwatersrand alone, 8124 students are at risk of financial exclusion due to historic debt.

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The Student Representative Committee said this meant that even though the affected students passed their exams and had been readmitted, they would be barred from continuing their studies for no reason other than that they are poor.

Writing off debts would turn universities into low-grade institutions – Jansen

Higher education expert Professor Jonathan Jansen said it would be disastrous to simply write off about R13 billion in historic student debt.

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“You cannot solve this problem in a fight between the students and university management because the solution does not lie there … the universities, most of them, do not have money to just wipe out all the debt,” he said.

Jansen said if they did that, the universities would certainly be forced to reduce their standards, as they would have no capacity to fund the purchase of computers, laboratories or new books, or hire new staff.

“If they do that, even the marginal base that they make when they collect debt will make our universities low grade, typical third world institutions,” he said.

He said the real fight should be between the universities as a whole and government. He urged government to find a way of dealing with historic debt, otherwise the scenes of protest and violence would continue from one year to the next.

“We cannot solve it between the students and universities. I have proposed that government finds a way of covering at least 50% of the debt within the fiscus, that is to say restructure the national budget of the country such that over a period of five years you give all 26 universities the security that 50% of their debt will be paid back through the fiscus,” Jansen said.

He said government should also find a way to get universities to limit student debt to a certain fee and make it mandatory for graduates aided by the National Student Financial Aid Scheme (Nsfas) to start paying back their loans from their first pay check.

Jansen said that currently universities were in panic mode, writing off debt and extending registration periods in the hope that students would miraculously find the money they need.

”These are cut-and-paste solutions, not lasting solutions, and it is simply keeping the lid on the boiling pot,” he added.

Free education is possible

The University of Cape Town has announced that around R30 million has been set aside to assist eligible students with historic debt.

Education activist, Henrick Makaneta, said the free education that students demanded was possible. He said government should find a way to collaborate with the private sector to help realise this.

“Free education is possible. The only thing lacking is the political will. Academic exclusion should indeed be halted given the seriousness of the period of Covid-19 which affected students negatively.

“What is required is the political will by government and the ability to treat student funding as an investment rather than some fruitless expenditure,” Makaneta said.

Patrick Bond, professor at the University of the Western Cape’s school of government, was critical of Finance Minister Tito Mboweni for the R6.8 billion cut he made to the higher education budget last month, an action that catalysed the recent student protests.

“The R13 billion in historic student debt is peanuts compared to the R2 trillion national budget and to the R120 billion higher education allocation. It should be written off entirely, so that the 2015-17 generation’s #FeesMustFall victory has no more loopholes,” he charged.

Bond said aside from additional borrowing at a time when financial markets have never been more liquid (the JSE is at a record high), there were ways to do that responsibly.

He proposed urgently imposing a wealth tax or raising the corporate tax rate – which was 52% during late apartheid, but has been further slashed by Mboweni to 27% – or following other middle-income countries with quantitative easing (money-printing) support from the SA Reserve Bank, since inflation is so low.

Bond also called for the imposition of exchange controls so as to drop interest rates, and in the process halt what Treasury admits is up to R330 billion in annual illicit financial flows, along with the R250 billion in annual procurement fraud on the budget.

“The point here is that Treasury just declared war on society, what with its austerity budget. There will be push-back from all sorts of victims, and in an election year, that means one thing politically: a supremely confident ruling party is actually playing with fire,” he added.

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