Graduating from University with Debt

“IN THE RED” is the title of an eight-minute horror film by the American Student Assistance, which aims to educate American college and university students about the perpetual cycle of student loans.

We learn that, as hard as she could try, the main character in the film is in for a rude awakening as she realises that she cannot escape from the spectre of her debts.

She has a decent job that pays her a good salary yet still she cannot keep up with paying off her debts, just like running on a treadmill to nowhere.

Therefore, between her student loan debts and the high cost of living, her debts no longer are only something of a nightmare but have also become a horror movie of her life.

The main character’s story is real. And what the film is portraying is real-life experiences of many students and recent graduates in the USA, who are finding themselves in the red due to debts related to student loans.

Gone are the days when a college/university degree in that country was synonymous with prosperity, financial independence and a thriving life. The proof is also there that the problem of a student loan and its associated debt in the USA has reached a crisis of proportion, prompting president Barack Obama to propose making community college education free.

Well, that’s America – the most capitalistic country on earth, however we will be naive to think that our current student loan schemes, be it public or private, will not bring up the same risks being experienced in the USA.

Perhaps, for the majority of tertiary students, the loans they take through the Namibia Student Financial Assistance Fund (NSFAF) [and other private loans] actually provide them opportunities which they otherwise would not have to afford their education.

Unlike the old public service bursary scheme whose financial support was geared towards people who would work in the public sector, the workings of the NSFAF is such that it provides loan/grant support to both public and private sector students. There is the catch, however, in that the beneficiary will have to repay the grant.

In recent times the NSFAF has not been the only loan provider available on the market but aspiring tertiary students also take loans from private companies, including cash loan companies, banks and other predatory financial institutions.

Students who enrol in Namibia’s institutions of higher learning vary in their needs and socio-economic backgrounds. But most do not just end up at the universities as individuals. Instead, they carry hopes of many in the villages/communities from where they hail.

That means to be a graduate in Namibia comes with huge social responsibilities, including being a cash cow and a source of social security for families and communities. On top of trying to settle their own student debts, they also have to carry the financial burden of serving as insurances for health care and education support, weddings, death and so forth.

Financial economics is not my native language but I would think that the loans taken by our students are not interest free. Therefore, while acknowledging the important role student loans play in helping students pay for their territory education, the provision of student loans comes with significant ripple effects on students, their families, the economy and society at large.

By their nature, loans are emotionally and psychologically draining, therefore they may have profound physical, mental and emotional repercussions on the borrower.

Having debts also affects the contours of the borrower’s life. When a person is faced with ballooning debts, his/her capacity to engage in other purchases – such as a house, a business, a car, or save or invest in the market – that are important to a healthy economy becomes nearly impossible.

Also bear in mind, that not all those who made it through the doors of our institutions of higher learning get absorbed by the labour market. But, even when they do, many end up with jobs that pay less, which also make it difficult for them to repay their accumulated student loans.

And there is another final blow to new graduates. Usually, financial institutions are cautious to lend money to someone who already has existing debts to settle. Economically speaking, such individuals are generally deemed to be risky borrowers due to having too much to pay between the existing loans and the new ones.

Against this background, there is an urgent need that we work towards a tuition-free university education to ensure that no student, who attends our public colleges and universities, should graduate with perpetual debt.

• Ndumba J Kamwanyah is a lecturer at Unam’s department of human sciences. The views expressed are entirely his. Twitter:

@NdumbaKamwanyah

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