‘Do not pay back government loans,’ union urges students

The Namibia National Students Organisation (NANSO) has called on the government to cancel student debt and turn the current student loan facility into a grant distribution programme. The recently elected president of NANSO, Dorthea Nangolo, said that, if the government fails to cancel the loans, students should not repay them.

Nangolo urged students to take her call not to service the loans “seriously”.

The government of Namibia currently disburses loans to students through the Namibia Students Financial Assistance Fund (NSFAF), a quasi-government body specifically set up for this purpose. NSFAF provides financial assistance to eligible students at approved tertiary educational institutions, according to its website. In 2023, 22,178 students were approved for funding. Apart from tuition fees, the organisation also disburses a non-tuition monthly payment of about N$2,400 (about US$132) to each student.

Accusations of inefficiency

NSFAF has been accused of unnecessary delays in its disbursement of loans. In 2017, students threatened to shut down NSFAF nationwide because of late disbursements of tuition fees, allAfrica reported. In 2022, students were up in arms and accused the organisation of inefficiency when NSFAF failed to disburse non-tuition loans, the Windhoek Observer reported.

Earlier this year, the prime minister’s office had to intervene after students were unable to settle their debts in time for graduation due to untimely payments, according to a news report the namibian published on 19 March 2024.

Ruling party parliamentarian Modestus Amutse diagnosed the problem of overdue payments as lying with parliament rather than the NSFAF. Addressing parliament on the matter in 2022, Amutse explained that parliament only approves the budget for funding organisations such as the NSFAF in June or July, yet colleges open in January. He said this misalignment resulted in some students abandoning their studies after failing to get money in time, according to the publication Informanté.

High interest rates unfair

The NSFAF, however, has recently come under fire for demanding interest rates on its loans. NANSO claims the interest rates are a “heavy burden” on struggling students and “unjust”. In her maiden speech as the new leader of NANSO, Nangolo, according to NEW ERA LIVE, said at the recent NANSO elective congress: “NANSO’s resolution 16 from our congress boldly asserts that demanding students repay loans with interest contradicts the constitutional principle that education is a fundamental right.”

In an interview with University World News, Nangolo said that NANSO wants the entire loan facility to be replaced by grants. “It is an unfair burden to expect students to repay loans with interest when the youth unemployment rate is so ridiculously high,” she said.

Nangolo said paying back student loans was taking its toll on the mental health of students who are also reeling from other pressures of life. “The mental health of students is deteriorating because of debt, and ‘black tax’. Paying back the loan is impractical if education is a constitutional aspiration,” she said.

The University of Namibia, according to local press, said it was prioritising student mental health following the death of a computer science student in June. The police ruled that his death was a suspected case of suicide and the student’s friends said he was worried about examinations and financial difficulties, the namibian reported.

The proposed grants scheme

For the proposed grants scheme to work, the government should first produce a consistent and effective way of funding education, Nangolo told University World News. Grants, unlike loans, do not have to be repaid. Asked to explain where government would find the money to support the grants programme, Nangolo said Namibia was a “mineral and natural resource-rich country”.

She said: “As NANSO, we demand that the education sector be made a priority in benefiting from the country’s mines and energy and fisheries sector. This way, the money generated from these sectors fund tertiary education.” She also suggested cost-cutting measures to free up financial resources. “NSFAF must go back to the ministry of higher education to cut employment costs.”

Is cancelling loans a good idea?

Renowned Namibian economist Klaus Schade told University World News that cancelling student loans and replacing them with grants would have undesirable consequences. “If the government turns the loan into grants, as it is the de facto case since very few honour their repayment obligations, then the government must cut expenditure elsewhere, such as investment into education and health facilities, and social grants. Or increase taxes or increase borrowing. These options are not desirable.”

Schade said society invests in students and it was incumbent upon them to honour this investment by paying back their loans. “Society, through taxes, has contributed significantly to their [students’] qualifications and their prospects of achieving a certain standard of living. They should repay their study loans and contribute to the opportunities of the following generation to pursue their studies,” Schade said, referring to the student loan facility as a “revolving fund”.

Adjustments needed

The loan scheme, as it stands, needs a few adjustments, Schade said. Repayments should only start once a student has secured a job or started a business. “Furthermore, there should be a five-year waiver period after starting employment to allow them [students] to build their lives and furnish their flats, and even repay additional loans they accepted during their studies.”

According to the NSFAF website, “The Fund is entitled to demand repayment of the loan from the debtor within 6 (six) months from date of expiration of the final academic year wherein he/she completed his/her studies and obtained his/her qualification.”

Schade suggested that the government “could also consider writing off a certain percentage of the total loans for the best 10% or so of students in a faculty”. He added: “We need to be more innovative regarding the repayment procedures.”

In 2022, Namibia’s Deputy Minister of Works and Transport, Veikko Nekundi, tabled a motion in parliament seeking to cancel debt for graduates that employ 10 or more people, the Windhoek Observer reported earlier. The deputy minister said his motion was motivated by the need to address unemployment and the “weighty burden of student debt from NSFAF”.

During the same year, former Namibian president Hage Geingob gave a 12-month amnesty to students who had not paid back their loans. Local press quoted him as having said: “We are aware that many NSFAF beneficiaries are finding it difficult to pay back their loans due to a scarcity of economic opportunities and other challenges. In this regard and to provide some relief, I announce the amnesty.”