Students who do not qualify for NSFAS assistance and cannot pay their own fees, referred to as the "missing middle", received a 0% fee increase in 2017.
The department convinced institutions to allow deserving students from poor backgrounds to register. Higher Education and Training director-general Gwebinkundla Qonde told Business Day the government would protect poor and working-class families.
"If you are not [funded by the] NSFAS you are accounted for in terms of zero-fee adjustments," Qonde said.
The "missing-middle" students had to pay their outstanding fees up to 2015.
Talks were being held to arrange with "missing-middle" students on how their debt should be repaid. These students would be absolved from 2016 fee increases.
"For 2017, they again have a 0% fee adjustment," while students from "rich families" would face an 8% increase, Qonde said. "The department is absorbing the fee adjustment for 2016 and 2017. It is worth billions," he said.
Minister of Higher Education and Training Blade Nzimande said on Thursday universities had agreed with him on the importance of allowing successful students with historic debt to register for the 2017 academic year.
The NSFAS will extend application deadlines for the 2017 academic year.
Nzimande said the NSFAS had paid out R1.3bn to universities and Technical and Vocational Education and Training (TVET) colleges in advance for students from disadvantaged backgrounds to ensure that deserving students were admitted for the 2017 academic year.
"On the matter of historic debt, broad agreement was reached with universities and colleges to ensure humane and transparent debt management and relief processes to assist academically successful students, so that they can register in 2017, where this is possible," Nzimande said.
This provision would help universities cover their operating costs in the first quarter of the year and ease the pressure on each institution's cash flow.
The department would pilot the Ikusasa Student Financial Aid Programme aimed at assisting 1,508 "missing-middle" students at six universities and one TVET college.
He said the Fees Commission's final report would make long-term recommendations on the pilot project, its funding needs as well as its scope.
Efficient Group economist Francois Stofberg said allowing debtors to register showed foresight as individuals could continue to add value to the economy in the longer term once they complete their studies.
However, as the NFSAS was a government-supported institution, it would increase government debt.
"These figures are not in the many billions, if you look at the debts of Eskom and SAA," Stofberg said.
Although the risk of financing students who were eventually unable to repay their debt always existed, students with historic debt had to be kept in the system through increasing the amount of debt students may accumulate, he said.
Nzimande is set to meet the South African Further Education and Training Students Association on Friday over concerns about TVET colleges.
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