Ideally, graduates should repay NSFAS. But what happens when the qualification is there and the job isn’t?
The question is becoming more relevant as the National Student Financial Aid Scheme (NSFAS) attempts to recover money owed through its old loan book.
Before 2018, NSFAS funding included loans that students were expected to repay once they entered employment. In December 2017, government announced a major change to the system, with qualifying poor and working-class students receiving funding in the form of bursaries rather than loans.
The change created a dividing line in the NSFAS system: students funded under the new model did not accumulate the same loan debt, while loans issued under the previous system remained repayable.
Those former beneficiaries are now part of a labour market where finding work has become increasingly difficult.
Statistics South Africa (StatsSA) does not publish graduate unemployment by year of graduation, so we cannot establish how many people in the 25-34 age group received NSFAS loans before 2018. The age group nevertheless provides a useful lens for examining the labour market facing younger graduates.
According to the country’s historical data, graduate unemployment among 25-34-year-olds increased from 9.0% in 2014 to 17.1% in 2024, while the rate among graduates aged 35-44 increased from 3.2% to 4.7%.
The figures show that younger graduates are facing a substantially weaker labour market than they were a decade ago. That matters in a repayment system built around the expectation that graduates will move from university into employment and, once they are earning enough, begin paying back what they owe.
The question is not whether graduates should repay NSFAS. It is what repayment looks like when a graduate has the qualification, but not the income.
The debt is there. So is the unemployment.
As of March 2026, 823,888 former students owed NSFAS a combined R49.5 billion in legacy loans, covering funding provided between 1991 and 2017. Recovering this money matters, but so does whether the people who owe it are earning enough to repay it.
Speaking in Parliament on 24 February 2026, Higher Education and Training Minister Buti Manamela described student debt as a “structural challenge” that is “intensified by high unemployment and inequality”.
Even though the available data cannot tell us how many unemployed graduates owe NSFAS, the overlap matters. NSFAS is trying to recover billions from former students while a significant proportion of younger graduates are struggling to find work. The debt problem, therefore, cannot be viewed only as a question of repayment.
It is also a question of what happens when the education system produces graduates faster than the economy can absorb them.
Read more: Tourism and the economy
When the job never comes
A graduate may leave university with a qualification and an outstanding NSFAS loan while still being financially dependent on their household or, where they qualify, government support.
That does not mean unemployed graduates are necessarily receiving social grants, or that their NSFAS debt should simply be written off. The available data does not establish either.
What it does show is how unemployment can shift costs between different parts of the government system rather than making them disappear.
The cycle is straightforward:
Money is spent helping someone access higher education. They graduate but cannot find work. Their outstanding loan becomes harder to recover, their contribution to the tax base is delayed and, depending on their circumstances, they may continue relying on state support.
Government can therefore find itself supporting a person at one end of the system while being unable to recover money from them at the other. The problem goes beyond the debt. When the economy cannot create enough jobs, it can prevent graduates from becoming economically active citizens.
That is the ripple effect of graduate unemployment.
The problem is bigger than NSFAS
Recovering historical NSFAS loans is necessary. But the bigger issue is what sustained unemployment does to government systems as well as the economy.
The latest Statistics South Africa figures show that the official unemployment rate rose 0.9 percentage points to 33.6% in the second quarter of 2026. Youth unemployment among 15-34-year-olds rose 1.5 percentage points to 47.4%, with the number of unemployed young people reaching 5 million.
These are more than labour-market statistics. They represent millions of people who are not earning, contributing income tax or participating fully in the economy.
The consequences are felt across government, from unrecovered student debt and delayed tax contributions to pressure on social assistance and household incomes.
Read more: Inside the GNU debate
That makes unemployment a problem that cannot sit with one department.
Education, employment, economic development as well as social protection are connected. A graduate who finds work can repay debt, support their household while also paying taxes and contributing to economic activity.
The goal, then, should be to create a chain of outcomes rather than manage the consequences in isolation.
The unemployment rate tells us how many people are without work. The bigger question is what that unemployment is costing government, households as well as the economy, and what could change if those systems worked together to get more people into work.
Discover more from WeLived
Subscribe to get the latest posts sent to your email.
Discover more from WeLived
Subscribe to get the latest posts sent to your email.