Vice-chancellors call for stakeholder funding strategy

South African vice-chancellors have called for a stakeholders’ debate that tackles the enormous challenges of financing student enrolment targets, sustaining student financial aid and releasing adequate funding in the face of tight fiscal demands as the country strives for vastly expanded higher education with equity and quality.

Higher Education South Africa, or HESA, said a multi-stakeholder team that includes the presidency, Department of Higher Education and Training, Treasury, National Student Financial Aid Scheme, parliament and the South Africa Students’ Union must come up with a comprehensive plan that puts funding at the heart of supporting higher education.

Parliament’s standing committee on appropriations heard from HESA, an association representing vice-chancellors from South Africa’s 23 public universities, that the most pressing challenges facing higher education were funding and improving student success rates.

The HESA vice-chancellors in parliament on 21 October were the University of Cape Town’s Dr Max Price, University of Fort Hare’s Dr Mvuyo Tom and Durban University of Technology’s Professor Ahmed Bawa. Also there were University of Johannesburg Deputy Vice-chancellor Jaco van Schoor and HESA CEO Dr Jeffrey Mabelebele.

While student numbers have gone up radically since 1994, the year of democracy, racial inequalities in enrolment ratios and success rates remain.

A 2013 study by the Council on Higher Education found that only one in four students in contact universities graduate in regulation time. Some 35% of the total intake – and 48% of contact students – graduate in five years, and 55% of the total intake will never graduate.

Higher education growth

Parliament heard that as of 2012 there were just over a million university students, 773,000 college students and 315,000 people in adult education and training. But 2.9 million 18-24 year olds were neither in education, employment or training.

The figures indicated that university was the educator of choice for students, although the technical and vocational education and training college sector was rapidly expanding and was intended to enrol the bulk of post-school students in the years to come.

Both the National Development Plan and the Department of Higher Education and Training’s White Paper for Post-School Education and Training have set a growth target of 25% for the university system, to 1.6 million students in 2030.

Most of the projected growth will be funded by the state.

“Our major concern is that a massive expansion planned for the sector is not matched by a coherent financing plan. Related to this is a concern that such expansion is not linked to the existing capacities and capabilities of the system,” said the HESA leaders.

Issues at stake

Although there had been significant government support for higher education since 1994, spending per student had dropped alarmingly. Expenditure had also been decreasing as a percentage of the government's budget and of gross domestic product.

These declines had put pressure on other sources of income available to universities – tuition fee and third stream income accrued from research grants, contracts and donations.

“While universities have increased levels of third stream income to some degree, these increases by no means compensated for declines in government subsidies, leaving universities in increasingly worsening financial positions,” HESA said.

According to figures from the Centre of Excellence in Scientometrics and STI Policy at the University of Stellenbosch, third stream funding for universities rose to R14.1 billion in 2010 from R8.8 billion in 2000, student fees went up to R15.7 billion from R7.8 billion during the same period, and government funding went up from R15.9 billion to R19.9 billion.

HESA said that although funding for the National Student Financial Aid Scheme, or NSFAS, was set to increase from R5.1 billion in 2013 to R6.6 billion in 2016-17, annual student protests at some universities highlighted the sad reality that the allocation was not adequate to meet the funding needs of students eligible for NSFAS loans and bursaries.

Currently between 20% and 25% of university students use NSFAS funds.

Apart from the inability to fund the increasing number of eligible students already in the system, other factors were likely to compound the funding challenge of universities in the short to medium-term.

Apart from anticipating an enrolment of 1.6 million students by 2030, the White Paper for Post-School Education and Training reaffirms the principle of cost recovery of loans as the basis for a sustainable national student financial aid model and commits to progressively introduce “free education for the poor in South Africa as resources become available”.

The National Development Plan, or NDP, acknowledged that to meet the 1.6 million higher education students target, “greater understanding within government is required to acknowledge the importance of science and technology and higher education in leading and shaping the future of modern nations".

“Given this acknowledgement, it is becoming self-evident that without such a guaranteed increase in state revenue, attempts at expansion cannot succeed,” said the vice-chancellors.

Higher education spending as a proportion of gross domestic product remained woefully low in South Africa. If projected growth was to be realised, “higher education as a percentage of GDP has to increase significantly in line with that of most emerging countries,” said HESA.

Funding framework under review

HESA said projected student enrolment growth was dependent on ‘new money’ being secured for the NSFAS for the next 14 years. Since such student growth will put pressure on university infrastructure and teaching and support staff, the size of block grant and other forms of earmarked funding would also have to increase significantly.

Funding for universities is centred around four key principles: cost-sharing between the government and students; university independence in determining student fees; funding linked to the delivery of academic activity and output; and funding built around incentives designed to steer the higher education system in accordance with national development goals.

“In the absence of ‘new money’ for both the NSFAS and government subsidies, the higher education system will not meet the enrolment targets set in both the White Paper and NDP. Student fees will inevitably increase exponentially, often beyond the affordability levels of fee-paying students.”

The vice-chancellors said there was a need for a broader discussion on how the challenge of increasing enrolment targets could be pursued simultaneously with improving student throughput rates.

“A hard conversation is required to forge a national consensus on this issue,” they concluded.