Answer to Question #216429 in Macroeconomics for john

Question

What is the consequence and impact of continued high failure rates, by especially NSFAS financed students, at SA Higher Education Institutions on every South Africans Debt Levels and the overall National Budget of the SA Government? In your response be very specific regarding the examples you use to clarify your response.

Answer 1

Solution:

Continued high failure rates by especially NSFAS financed students at SA Higher Education Institutions on every South Africans Debt Levels will result to funding crisis. The NSFAS will experience a major shortfall to fund the government bursary. As a result, South Africans Debt Levels will increase to significant levels as the government attempt to seek for more funds elsewhere through loans to support the bursary program since the students are not repaying.

 

Continued failure rates will impact the overall National Budget of the SA Government in a negative way in that it will lead to underfunding of other major projects in order to maintain the huge budget of education funding. For the government to balance the National Budget so as to cover NSFAS financed students who are not paying, it has cut the budgets of some other government institutions in order to sustain the bursary program. This will ultimately affect the performance of the other government projects that need more funds to meet their objectives. Therefore, the economic growth and performance of South Africa will be affected negatively in the long-run.