NSFAS raises concerns over missing middle loan scheme’s reach

The National Student Financial Aid Scheme (NSFAS) has raised concerns about the government’s proposed low-interest loan scheme intended to support the so-called “missing middle” of students who do not qualify for full bursaries but still struggle to afford higher education.

NSFAS Chief Executive Officer mentioned the programme’s objectives during a briefing on Wednesday, saying the plan to offer loans at reduced interest rates is well-intentioned but could fall short of helping the students it was meant to support.

The “missing middle” refers to learners whose household incomes are too high to qualify for full NSFAS support yet too low to comfortably pay for tuition, accommodation and other student costs. Rising university fees and living expenses have made this group a growing concern across South Africa’s tertiary education sector.

Under the proposed scheme, students could access loans with lower interest and more favourable repayment conditions compared with standard bank credit products. However, NSFAS warned that the eligibility criteria and structure of repayments may restrict access and leave many hard-pressed students still unable to participate.

Officials highlighted that while the low-interest product might look attractive on paper, barriers such as credit checks, upfront costs or inability to meet monthly repayments could undermine the scheme’s effectiveness. They said careful calibration of eligibility rules and safeguards is needed to avoid excluding the very students who need support most.

The warning comes amid broader debates about the affordability of tertiary education in South Africa and how best to expand access without saddling graduates with unmanageable debt. Stakeholders, including student organisations and education analysts, have called for more inclusive solutions that extend beyond loans to address systemic inequities in funding and access.

NSFAS said it will continue engaging with the Department of Higher Education and Training, Treasury and other partners to refine the proposal. They emphasised the importance of aligning the scheme with existing financial aid policies and ensuring that any new product does not replicate the shortcomings of commercial debt instruments.

Government officials welcomed NSFAS’s input, saying the feedback will be factored into further policy development. They reiterated their commitment to finding long-term solutions for the financing gap affecting students in the “missing middle.”