I remember sleeping inside the campus library for three months and bathing in the toilets while I was a student at the University of the Free State in 2015. I was not the only one faced with such challenges but most of us held on with the hope that our predicament would change once we had graduated.
While some of us have managed to escape the clutches of financial lack, there are many others who remain oppressed. The fact that student debt was reported to be R14bn by the year 2021, is an indication that we have a serious crisis on our hands.
This crisis played itself out during the height of the FeesMustFall protests back in 2016 when varsity students across the country demanded free education.
It was during such times that I was inspired to start thinking of ways in which the actuarial profession could play a part in solving this problem. After all, our job in the actuarial field is to help the government, and organisations make financially sound decisions for the future.
I believe the risk pool approach, based on actuarial principles, is a viable model to tackle socioeconomic issues including student debt within the SA context. This is the same model used to design solutions for basic insurance like funeral cover. It is based on the idea that a group of people can contribute funds to help them save for the eventuality of death.
This solution is not limited to insurance or medical schemes. As citizens we could use the same principle of collective fund gathering to help tackle the student debt. According to Statistics SA there are 34.5m citizens between the ages of 20 and 65 in the country. If this population group contributes R100 each we can raise R3.45bn a month which amounts to R41.4bn annually. With this kind of collective effort we could wipe out existing debt and subsidise incoming students.
SA actuaries need to collaborate to develop a solid model based on such principles. We must use our rare abilities to create social impact, inform high-level strategic decisions and have a significant effect on peoples' lives.
Every year thousands of people graduate from SA universities or colleges only to be haunted by student debt. Most of us enter the higher education system on a deficit because we come from low-income households and the struggle to get a degree symbolises our attempt to make a better future for ourselves.
As CEO of the Actuarial Society of SA (Assa) Mike McDougall rightly puts it, we can benefit from a solution that upholds principles of ubuntu and actuarial skill.
“The funding of tertiary education remains a very serious challenge for South Africa. While much work is required, this proposal provides a framework for what could be a viable solution,” McDougall says.
During his State of the Nation Address this year President Cyril Ramaphosa pointed out that resolving our country’s issues would require common consensus.
“A consensus that is born out of a common understanding of our current challenging situation and a recognition of the need to address the challenges of unemployment, poverty and inequality”, Ramaphosa said.
This view is further supported by public interest actuary and former Assa president Lusani Mulaudzi who emphasises that a movement that tackles the issue from grassroots level is essential. “We can't expect the government to solve all of these problems, we have to come together and make a contribution” Mulaudzi said.
We can apply sound actuarial principles similar to those used by insurance companies to develop a solid model that allows citizens to assist by making small contributions.
• Ngobese is an actuarial analyst and CEO of Wesolve4X
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