The Decusatio ZA Group Chat: Should Student Debt Go on Your Credit Record?
By Emma Montocchio Writing for The Decusatio ZA Group Chat
Conversations in South Africa often happen in silos. Boardrooms speak one language, social media another, and policy debates rarely meet people where they are. The Decusatio ZA Group Chat is our attempt to bridge that gap — a discussion series where our business advisory team, including professionals and younger voices, explores real questions facing South Africans through data, business insight and lived experience.
We’re not trying to provide the final answer — just to challenge assumptions and start useful, grounded conversations.
Our first topic: Should student debt appear on your credit record?
The Scale of Student Debt in South Africa
South Africa’s student debt crisis has quietly become one of the country’s biggest social and economic challenges, especially for young people. As of March 2025, the National Student Financial Aid Scheme (NSFAS) was trying to recover R45.9 billion from over 841 000 debtors.
That means hundreds of thousands of South Africans are starting their adult lives already burdened by debt — often before they even find stable employment.
The question is whether that debt should appear on credit records. Would it promote accountability and improve repayment, or would it unfairly punish those who are already struggling to gain a foothold in the economy?
A Case for Accountability
There’s a reasonable argument that student loans should count toward credit profiles. If a loan affects affordability, it should also be reflected in someone’s financial record. Including student debt on credit reports could promote responsibility and reward borrowers who honour their repayments.
It might also help the state recover funds that could support the next generation of students.
Currently, lenders often extend credit without knowing whether an applicant carries student debt. That incomplete picture increases the risk of default — for both banks and borrowers. By integrating student loans into credit records, lenders could make more responsible lending decisions and protect borrowers from over-indebtedness.
Globally, this approach isn’t new. The United Kingdom, Canada, and the United States already link student loans to income. In the UK, graduates only start repaying once they earn above £27 295 per year, with payments deducted automatically from salaries. Remaining balances are written off after 30 to 40 years.
It’s a structured system that ties repayment to income, not rigid deadlines, protecting low earners from being penalised.
The South African Reality
Applying that model locally isn’t straightforward. Youth unemployment sits above 40%, and even graduates often earn less than what’s needed to cover living costs.
Adding student debt to credit records in this environment could make it even harder for graduates to access housing, car finance or small business loans — the very tools needed to participate in the economy.
Another key issue is financial literacy. Research from the Financial Sector Conduct Authority (FSCA) and the Human Sciences Research Council (HSRC) shows that South Africans score an average of 52 out of 100 on financial literacy. A 2023 study by Franc found that only 42% of adults are financially literate — ranking South Africa third in Africa but just 39th globally.
Worryingly, literacy levels are declining: the share of people scoring “very low” rose from 7% in 2015 to 21% in 2020.
Without understanding how interest compounds, or how credit scores work, many graduates struggle to manage debt responsibly. Expecting them to navigate complex repayment systems without guidance sets them up for failure.
When Repayment Becomes Punishment
While universities need to recover unpaid fees, the methods used can be counterproductive.
A 2025 analysis by Professor Michele van Eck from Wits University, published in The Conversation, found that South African universities collectively held R9.3 billion in unpaid fees by 2023. Many responded by withholding academic records, degree certificates, and exam results from indebted students.
Although legally defensible, these measures make it harder for graduates to find work and repay their debt. In contrast, universities in the US and UK are discouraged from using academic sanctions for non-academic debt. They rely instead on income-based repayment systems, allowing graduates to start earning before repaying.
Van Eck suggests two practical reforms:
- Automatic salary deductions once graduates are employed.
- A legal amendment preventing student debt from expiring after three years.
Both ideas promote accountability while maintaining fairness.
The Missing Piece: Financial Education
Financial literacy is the foundation of any sustainable repayment system — and South Africa continues to lag.
A 2024 report by Avo Vision found that only 26% of South Africans have emergency savings, while a third have no retirement plan. These numbers highlight how poorly financial education is integrated into schools and universities.
Avo Vision’s programmes have reached over 540 000 participants, including 305 000 young people, through partnerships with Absa, Sanlam, and Liberty. The demand for these initiatives shows that young people want to learn how to manage money — they just need accessible, practical tools.
If South Africa wants better repayment rates, financial education must start before students take on their first loan. Borrowers should understand interest, budgeting, and credit scores before graduation. Debt should come with understanding, not confusion.
The Youth Perspective: Accountability vs. Access
At Decusatio, we work with financial services clients, investors and impact-driven organisations, so we see how decisions about credit, lending, and education funding affect both balance sheets and people’s lives.
That’s why we approach student debt with a dual lens:
- the commercial reality of repayment, and
- the social responsibility of ensuring access to education.
Listing student loans on credit records might make sense, but only within a fair and functional system. That would mean:
- income-based repayment thresholds,
- automatic salary deductions above a defined earnings level, and
- clear grace periods to help graduates transition into employment.
It would also require stronger financial literacy programmes from the moment a student borrows, so repayment becomes a managed process — not a lifelong penalty.
A Balanced View
Education should expand economic opportunity, not restrict it.
If South Africa gets the structure right, student debt could evolve from a burden into a disciplined pathway into the economy. Striking that balance between accountability and access is where advisory firms like Decusatio add value — helping both institutions and individuals navigate the intersection of finance, education, and social progress.