I had a R76,000 loan from NSFAS in 2017. In 2018 this loan was converted to a bursary, and I graduated in 2021. Last week I found an email from NSFAS requesting I pay it back. What should I do?

The long answer

Thank you for your email about your NSFAS debt which you were only informed about when you logged onto an old email address this year, and found a letter from NSFAS lawyers. You had a R76 000 loan from NSFAS in 2017. In 2018 this loan was converted to a bursary, and you graduated at the end of 2021 – i.e. five years later.

You were horrified to discover that NSFAS required you to pay back the full amount of the loan and had charged interest from 31 December 2022, i.e. a year after you had graduated. You feel that NSFAS should have contacted you at the end of 2021 when you graduated so you could plan to make payments. You are now working for an NPO and supporting some of your family and you cannot afford to repay more than R500 a month and you don’t know when the loan would be paid off.

It must have been a dreadful shock to get the news about repayment of the loan three years after you graduated.

You have two questions:
1. Can the outstanding loan from 2017 be converted to a bursary in the same way as when you were studying from 2018 to 2021?
2. If not, can the interest at least be waived?

1. To start with the first question: Can the outstanding loan from 2017 be converted to a bursary in the same way as when you were studying from 2018 to 2021?

Unfortunately, I don’t think that will be possible. You may remember that it was only after the 2015 Fees Must Fall protests, that then President Jacob Zuma declared that higher education would be free, in the face of widespread condemnation by education authorities who protested that it was unaffordable and that the decision was taken without discussion with themselves. That decision was implemented in 2018 and so the NSFAS loans made in 2017 were not affected and still stand.

The loan repayments are contingent on your income and only begin when you are working and have an income of more than R30 000 annually. The interest rate starts at 3% and increases by 1% for every annual salary increase of R6 600. NSFAS also liaises with SARS to establish the income being earned by debtors.

Fincheck.co.za says that "NSFAS will send you statements showing how much you owe and how much you must pay back each month. It is your legal responsibility to keep in touch with NSFAS and to inform them of any change of address. You should make sure that information such as your employment status and your personal details, including address and cell phone numbers, are up to date.”

Unfortunately, most of us do not read the Terms and Conditions in the legal documents we sign, because it is so boring and time-consuming, but the loan agreement you signed with NSFAS for your initial year of study in 1917 would have required the following, according to the NSFAS Bursary Terms and Conditions:

6.1 Any statement or notice referred to in this agreement may be sent to the
student:
16.1.1 by posting it to the home address recorded in the Bursary Agreement; or 16.1.2 by sending it to the student email address recorded in the Bursary Agreement; or 16.1.3 by sending it by SMS to the student cell phone number recorded in the Bursary Agreement.
16.2 Written notices may be sent to the student at the residential home address, or alternatively to the relevant higher education institution. Notice and court proceedings may also be served on the student at these addresses.
16.4 The student may change his/her cell phone number or home, postal or e-mail addresses by sending a notice to NSFAS by registered post or process as prescribed by NSFAS from time to time.
The 2017 NSFAS Handbook states:

8.32 All students receiving a NSFAS loan MUST sign both a pre-agreement statement and quotation AND a loan agreement form. These two documents MUST be signed by the student and NSFAS in the right order.

8.34 The National Credit Act 34 of 2005 requires that all credit agreements are accompanied by a pre-agreement statement and quotation (PASQ) which details the full cost of credit, the interest rates applicable and the repayment terms and conditions.

8.38 While students remain indebted to NSFAS for their loans, students must keep NSFAS informed of any change in postal or residential address, contact details, and/or employment status and information (income, employer). Failure to do so could result in the loan becoming immediately payable.

P. Govender, in a Master’s thesis for DUT, said that “…the failure of a student to read the terms and conditions of a student loan contract will not be grounds enough for them to be let out of the contract. The rationale behind this finding is that the rule, in essence, mandates that a party who signs a legal contract must abide by all of its conditions, whether or not they have been read.”

“When it comes to student loans, it is important for students to read the T’s and C’s to know what they have signed up for. This will enlighten them on options regarding default and grace periods. A failure to do so can result in an increase in the loan (through the application of provisions that require the student to pay a penalty), or the student could default on the loan without knowing it.”

So, unhappily, although NSFAS seems to have failed to contact you timeously about repaying your 2017 loan, they can argue that you did not keep them updated on your changed email address as you were obliged to do.

But it would be worth connecting with a consultant at the NSFAS Contact Centre on 08000 67327 or email info@nsfas.org.za. And the following excerpt from the 2017 Handbook is also instructive:
8.40 Regulations promulgated in terms of the National Credit Act 34 of 2005 require that NSFAS provide information to students about their right to submit complaints to the National Credit Regulator, the right to alternative dispute resolution, the rights to apply to the National Consumer Tribunal and the right to apply to a debt counsellor. This information and these rights are documented in the loan agreement terms and conditions document. NSFAS and/or the financial aid officers supporting NSFAS in the signing of the loan agreements must ensure that attention is drawn to this information and these rights.

You could ask the consultant how the alternative dispute resolution might be used to assist you.
To go to your second question:
2. If the 2017 loan cannot be converted to a bursary, can the interest at least be waived?

Again, unfortunately, this is not very likely. In a 2017 Parliamentary Monitoring Group report on NSFAS and debt owed, NSFAS said:  
1.Due to the way the NSFAS debt is structured, NSFAS does not have a complete and accurate record of when NSFAS debt becomes due and payable. NSFAS debt becomes due and payable when a debtor is employed and earning above R30 000 per month. Debtors are required and expected to contact NSFAS when this condition has been met. NSFAS therefore establishes when a debt becomes due and payable by using available South African Revenue Service records but this information is an approximation.  
2. NSFAS only writes off debtors when they are deceased or disabled. For the reasons stated above, NSFAS is not able to determine when debt is prescribed. Prescription of debt is therefore determined on a case-by-case basis.

NSFAS says that “Repayment of the Bursary amount will be subject to compound interest reckoned from the date upon which NSFAS claims the amount from the student.”
From the 2017 NSFAS Handbook: Interest and Loans
8.25 Interest is charged on all loans.
The NSFAS interest rate is pegged at 80% of the repo rate announced by the South African Reserve Bank on the 1 April every year, and is fixed at this rate for that financial year (1 April to 31 March). Notifications to debtors must be made within thirty (30) working days after the date on which the new rate takes effect;
8.25.3 once a student has exited the university, he/she becomes a debtor to NSFAS – this is the first repayment trigger; the second repayment trigger is the earning threshold of the debtor. This is currently set at R30,000 per annum;
8.25.4 That repayments are based on the income earned by the debtor – this means that the repayment of NSFAS loans is income-contingent;
8.25.5 Interest is calculated daily and applied to accounts monthly

But this is important:
12.4.3 The student will be afforded the protection of Section 103(5) of the National Credit Act (NCA). webberwentzel.com explains that Section 103(5) says that the aggregate interest, fees and charges (including collection costs) which accrue during the time that the consumer is in default, may not exceed the unpaid balance of the principal debt at the time of the default. So if you owed R76,000 for your loan, the interest and lawyers’ fees etc could not amount to more than R76,000 again.

Also, any consumer can approach the National Credit Regulator for advice or assistance on any credit transaction falling under the National Credit Act, and the NSFAS loan would fall under the NCA E-mail for enquiries: info@ncr.org.za

So, apart from a possible enquiry to the NCA Regulator, I think the best advice is to see what room you have to negotiate with NSFAS about repaying the debt by seeing one of their consultants, explaining your situation, and asking for their help. (Remember that the Constitution says that all administrative action must be lawful, reasonable, and procedurally fair).

Wishing you the best,
Athalie