Photo: Adobe Stock
Photo: Adobe Stock
With the National Student Financial Aid Scheme (NSFAS) poised to cancel nearly R2 billion worth of student debt, Congress of South African Trade Unions (Cosatu) have joined in and called for the debt of all workers too scrapped too.
Cosatu said on Thursday 4 June that millions of those entering the labour market in South Africa remain burdened by crippling student debt, and added that the COVID-19 pandemic has done more damage to their fragile financial integrity.
Debt worsened by COVID-19
National spokesperson Sizwe Pamla said that several factors, including the need to support extended family members and the difficulty people with student debt have when trying to procure working capital are justifications for the historical debt to be scrapped.
“The Federation wants to see institutions of higher learning cancelling these academic loans for new workers entering the labour market and graduates that are sitting at home,” he said.
“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”
He added that with the financial catastrophe of the COVID-19 pandemic came a staggering number of job retrenchments, and said that the burden of student debts was making it nearly impossible for workers with student debt obligations to manage a credit rating that is able to procure working capital.
“The COVID-19 lockdown has deepened the financial stress that is faced by many workers who have impaired credit records and are 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 (LIFO) 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.”
‘Student loans not a choice’
Pamla said that the debt was not something taken on out of choice, but rather was the result of absolute necessity, adding that the high cost of living in South Africa meant that some South Africans are incurring more and more debt to supplement their “Meagre or slave wages”.
“Most people took this debt not out of choice but because they did not have any other available options. South Africa’s monopolised economy which imposes a high cost of living on the working class has meant that for some people they 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.
He said that the current structures are used against such people as a form of exclusion.
“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.”
