Thursday, 19 July 2012

Should access to education be an employee benefit?

Recent statistics coming from America on the factors contributing to the country's high levels of debt should serve as a wake-up call for South Africa, particularly the lengths to which their employees go in order to access education financing.

While no official and comprehensive statistics exist as yet for South Africa, it is common knowledge that South Africans are over-indebted.

According to the National Credit Regulator, more than 70 percent of the country's households are living from pay cheque to pay cheque. The implications of this are many. Of concern and interest to Eduloan is the impact that this is having on working South Africans' ability to further their education and that of their next of kin, due to an inability to afford student loans and, most commonly, failure to qualify for a loan due to their credit record.

Recognising the importance of education, the government has ensured that its departments recognise access to education as an essential employee benefit. Since Eduloan's inception in 1996, civil servants studying via this education financier have automatically qualified for loans without being subjected to credit checks and other forms of scrutiny.

Repayments deducted from salaries
To ensure that they do not default on their loan repayments,Eduloan has an arrangement with civil servants and their employer for the loan repayments to be deducted from salaries, as is done for other employee benefits, like pension funds, medical aids, and life insurance.

To date, Eduloan has disbursed over R3 billion in student loans to more than 620 000 beneficiaries.
But most importantly, this arrangement has changed how civil servants view access to education. For government departments, benefits include a better-skilled labour force and better relationships with employees, who appreciate the array of benefits afforded to them. The arrangement also re-emphasises the notion that the government is truly committed to enabling access to education for its employees and their families.

By including access to education as an employee benefit, corporate South Africa can also get to enjoy the same advantages - and this is what Eduloan is driving.

With the growing focus on good governance globally, there's a greater expectation for companies to be good corporate citizens - and employees are aware of this.

Change has started
A study released in the US a few years ago warned that although potential employees have had to motivate why an organisation should hire them, this was going to change - and it has started.
The global race for skilled personnel, a limited pool, is driving the trend. Increasingly, companies are having to motivate to potential employees why they should join their organisations. High on the list of what they seek, other than financial remuneration, is access to opportunities and development. Corporates cannot claim to offer this if they do not recognise or treat access to education as an important employee benefit.

While that trend has yet to gain traction in South Africa, it is only a matter of time until companies once again have to compete on the benefits they offer their most valuable asset - their employees. 

This is in addition to medical aid, pension funds, or the array of in-house employee-development programmes many now have. On the latter, the reality is that in-house programmes are not accessible to every employee, nor are company-paid education and bursaries. It is this gap that Eduloan has a track record of filling and it believes its offering can work for corporate South Africa.

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