Educate the next generation of tax payers to ensure South Africa remains competitive
The cost of a lack of education reaches much wider than the actual cost of a few years of university studies, says Totsie Memela-Khambula, CEO of Eduloan.
“Of course the cost of education increases annually, but the cost of the uneducated is a factor that cannot be overlooked,” says Memela-Khambula.
The damage to the country is immeasurable, she says.
“It means we cannot be competitive as a nation. The other Brics countries (Brazil, Russia, India and China), which are all deemed to be at a similar stage of newly advanced economic development, have really focused on educating their communities. South Africa needs to do the same if we are to successfully compete and do business with the other Brics in future.
“We have a young nation with a large percentage of people under the age of 25 that have dreams, but not the education to make them come true. This situation has repeatedly been referred to as a ticking time bomb.
“South Africans should start thinking about what they can do on an individual level to make a difference. We should of course expect government to do what is necessary to further education, but in the meantime we can all play a small role in improving the lives of countless young South Africans by saving one soul at a time,” says Memela-Khambula. “We could support non-government institutions related to education, we could offer to pay the school fees of one single child.” It is up to the entire community to make a commitment to the “code of quality education”.
She says South Africans need to look forward two decades and start teaching a high standard of mathematics and science to children when they are still young. The lack of learners achieving well in these subjects has important implications for the professional options open to these youngsters, and for the country as a whole.
“We need to expose them to the world of work soon, and often. We need to create a generation of educated taxpayers who can help support the country’s social and economic programmes, for instance by providing support to educational institutions to develop the capabilities of our nation.”
Memela-Khambula says we need to continue to generate taxes, and companies can only do so with educated personnel that are more productive and efficient.
“With grade 12’s finishing their matric exams, parents are now looking for ways to finance their children’s further studies, which may well cost them up to R75 000 per year,” she says.
With the cost of a BA degree ranging from R24 000 per year at the University of Johannesburg (UJ) to R34 000 at the University of Cape Town, and a whopping R59 000 at Monash, it is clear that only a fraction of parents can afford to educate their children out of their own pockets. These fees exclude accommodation, averaging R2 200 to R2 600 per month; books at around R5 000 per year; food at approximately R1 000 per month; and cash allowances averaging R1 200 per month. Other expenses may include clothing and medical aid membership.
According to UJ statistics, 16 000 of its more than 50 000 students have government loans from the National Student Financial Aid Scheme (NSFAS), 6 000 hold private bursaries, and a further 30 000 study with loans from banks or institutions like Eduloan. One can expect a similar picture at other South African universities, says Memela-Khambula.
She is concerned about banks and microlenders encouraging clients to consolidate all debt when they have trouble meeting their obligations. Some debt consolidation results in extended periods to settle outstanding amounts, often leaving already financially over-burdened South Africans exposed to more expensive interest rates payable over a longer period. This often results in over-indebtedness even before parents have a need for further loans to finance university fees.
“The message is that parents should start putting money aside for their offspring’s education as soon as they are born, by taking out policies or other ways of investing.
“The current cost of up to R75 000 per year may well translate into a million rand for a three-year degree in 10 years’ time. Start now, as this will go a long way to covering the cost in the end,” says Memela-Khambula.
“Eduloan has its own unique way of financing tertiary studies which differs from traditional personal loans or study loans in the sense that parents pay off the annual loan amount every year. These funds are paid directly to the educational institution and the additional funds may be loaded on a card – called Eduxtras, a budgeting mechanism for purchasing on campus. This means that the student will not end up overburdened by debt at the end of the study period.
“We are, however, looking to do a pilot for study loans aimed at candidates who study in fields where skills and relevant qualifications are in great demand and shortages need to be addressed. These loans will come with competitive interest rates and will be available only to students from their second year of study that have proven their academic skill and interest in the field during their first year of study.”
Memela-Khambula says Eduloan’s shareholders and investors have been engaged to look at these alternative products to enable additional access to finance beyond what Eduloan has done in the past to unlock the potential of South Africa’s youth.
“Eduloan has empowered thousands of South Africans to unlock their potential and start realising their dreams. We understand the real costs of tertiary education and offer study loans covering not only the course fees, but also additional expenses such as textbooks, registration fees and educational tools such as laptops and PCs.
In addition, Eduxtras, our unique bursary management tool, will allow students to manage and allocate bursary funds for specific needs such as books, accommodation, food and more, ensuring that your funds are spent appropriately,” says Memela-Khambula.
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