Lasarus N. Hakwaake
It is only in Namibia that those who benefitted from a student loan start their first job already having accrued debts. Starting work with debts can have a significant impact on a person’s financial situation and overall well-being, especially on youths. It is not good to start working with the burden of debt.
Firstly, debts can reduce the financial flexibility of youths. Student loan debt can make it difficult for youths to save money for other prerequisite financial goals, such as owning a house, starting an investment or making an early retirement plan. This is a result of why we have an angry nation today. I have never seen a happy person with debts.
Study loan debts have increased stress and anxiety at the beginning of work, which is supposed to be an enjoyment of the first salary and the inception of good financial planning.
Financial stress is a major source of stress for many young people today, and student loan debt can be a major contributor to this stress.
Young people with student loan debt may worry about making their monthly payments, defaulting on their loans or being unable to achieve their financial goals. This stress can lead to anxiety, depression and other health problems; thus, we have high suicide rates in Namibia today. Secondly, debts can create limited career choices among youths who have an interest to further their studies; this interest is short-lived due to study loan debts. Young people with student loan debt may feel pressured to choose a higher paying job – even if it is not the job they are passionate about. This can lead to job dissatisfaction and burnout. Thirdly, student loans may delay many life milestones that a person planned.
Student loan debt can delay important life milestones, such as when to get married, buy a house or invest in children’s education. This can be frustrating and disappointing for people who are eager to start building a happy family. Moreover, the NSFAF student loan scheme is just like other schemes that have been declared illegal by the Bank of Namibia (BoN). BoN should investigate this scheme. In Namibia, lenders are supposed to do affordability checks before lending money to borrowers. However, how is it possible for someone without a job to qualify for a student loan and then be expected to repay it after they graduate?
This scheme is creating a debt trap for young people. It is putting their future financial planning at risk. It will also make it difficult for them to qualify for a mortgage in the future. When young people apply for a mortgage, lenders will consider their debt-to-income ratio, which is the percentage of their monthly income that goes towards debt payments.
If they have a high debt-to-income ratio, it will be difficult for them to qualify for a mortgage or get a favourable interest rate. Finally, The future of the nation is in investment – not in loans to create debt. BoN should, therefore, declare NSFAF debt to students illegal.
* Lasarus Nghifindwako Hakwaake is a pastor at the All Souls Community Church of the Reformed Evangelical Anglican Church of Namibia in Eenhana.