Habib: Student loan model could present major debt problems

Wits University Vice Chancellor Adam Habib says he would have preferred a graduate tax model which requires all graduates to pay a tax to fund new generations as they enter the higher education system.

FILE: Wits Vice Chancellor Adam Habib. Picture: AFP

JOHANNESBURG - Wits University Vice Chancellor Adam Habib says that the student loan model suggested in the fees report of the Heher Commission could present major debt problems in the future.

Habib says that he would have preferred a graduate tax model which requires all graduates to pay a tax to fund new generations as they enter the higher education system.

President Jacob Zuma released the details of the report on Monday.

Professor Habib says that the report deals with many of the problems at the entrance level of universities.

He says that he’s concerned there may be problems in later years.

“I’m not particularly opposed to it, I’m not sure the students will accept it because it has some kind of loan debt attached to it.”

Habib says, moreover, that he’s worried about the resignation of National Treasury’s head of budget Michael Sachs from his position.

“Because when I hear that Michael Sachs resigned, I get the impression that this hasn’t been thought-through.”

He says that the Higher Education Department now awaits to hear from government on the report.

BANKING ASSOCIATION JOINS THE PARTY

The South African Banking Association says it’s ready to discuss ways to fund higher education with the government.

According to the report, the income contingency loans would be awarded to students and paid back when the individual begins to work and earns at a certain threshold.

The report also recommends that if students cannot pay, government would back pay the loan and students pay government in a system facilitated by the South African Revenue Service (Sars).

The Banking Association’s Cas Coovadia says that the banks are ready to engage government.

“We’re prepared to explore this.”

He says that it is not the banking industry’s duty to ensure this system works.

“But it all depends on the government coming to the party and saying this is the role we’re going to play to give you comfort that the money will be repaid.”

The commission also recommended that registration and application fees be completely scrapped across the board.

(Edited by Leeto M Khoza)