More questions than answers about viable funding model

The recent spate of student protests in South Africa’s institutions of higher education brought to the fore, yet again, the desperate calls for a better funding model.

The 2017 Heher Commission of Inquiry into Higher Education and Training report presented viable solutions to the growing crisis of university funding and the ballooning student debt currently sitting at almost ZAR14 billion (about US$983.5 million).

This is compounded by another crisis of youth joblessness. About 40% of youth between the ages of 25 and 35 are unemployed.

In the light of all of this, higher education leaders came together during a virtual think tank seminar hosted by the business school of North-West University, South Africa, on 15 April to deliberate how the country could balance the need for free higher education with the challenges facing the economy.

University unrest at the beginning of each academic year has become inherent to the higher education system. Part of the problem fuelling university protests, according to Dr Nic Spaull, senior researcher at Stellenbosch University’s economics department, is the minimal absorption of learners from the schooling system after they complete their matriculation.

“We are graduating matric students with the expectation that they will be going to university, and yet the rate of increase in enrolment is not keeping pace with the production of bachelor passes,” he said.

In South Africa’s schooling system, a bachelor pass affords a learner entry into the post-school system, but in varying degrees.

Some universities require more than just a bachelor pass and go on to further scrutinise a learner’s average final score against the qualification the student intends to pursue.

According to Spaull, bachelor passes have increased by 7% since 2011 compared to university enrolment, which has grown by just 2.7% since the same year. It all boils down to who has access to universities.

The wealthy more likely to study

In his presentation, Spaull reflected on a report by the Davis Tax Committee from 2016, which gave a stark glimpse into access to higher education and the beneficiaries of government subsidies.

The committee’s report found that the wealthy are likely to access and gain entry to university.

Only 10% of children from the poorest 70% of the population qualify to go to university, compared to 40% of children from the wealthiest 10% of the population.

“The children of the wealthy are likely to get to university because the children of the wealthy are more likely to attend functional schools which give them the passes that they require to gain entry to university,” Spaull said.

He further argued that, in view of this disproportionate access to higher education between the wealthy and the poor, society needs to think carefully about who benefits from government subsidies to universities, which are higher compared with funds transferred by the government to the National Student Financial Aid Scheme (NSFAS), the government’s funding scheme, which is now a bursary rather than a loan for students in the higher and technical and vocational education and training (TVET) sectors.

In 2018, the Department of Higher Education, Science and Technology transferred 32% of its budget allocation to university subsidies compared to NSFAS transfers of 15.3%.

“This is important when we are asking questions about whether there should be an increase of public funding of higher education.

When we say public funding is for the ‘poor’ we need to ask what we mean by that if it’s not predominantly the poor who access universities. The poorest 70% of households in South Africa receive 11% of the subsidy,” Spaull said.

Growing ‘missing middle’

Former NSFAS CEO Dr Randall Carolissen agrees. “I would argue that, to just throw more money at a problem without a good analysis would be folly and counter-productive,” he said.

Carolissen used as an example other African countries that manage a higher education system and achieve a whole lot more with minimal resources and mostly no bursary funding model.

“In Nairobi, Kenya, by reforming the TVET sector, they made it so effective that they countered two major social problems.That of crime, by making TVET colleges more favourable to youth that they also ended up seeing the value, and also the issue of urbanisation, by having good quality TVET colleges with relevant curriculum close to home to counter the urbanisation,” he said.

There are a few TVET colleges in South Africa that function at their optimum and have a demonstrable throughput rate, an issue that reared its head throughout the panel discussion. The lacklustre condition of the TVET sector contributes to its non-popularity among youth, who rightfully see universities as more opportune than TVET colleges for various reasons.

Of equal importance, Carolissen said, is the growing ‘missing middle’ who are often regarded as too ‘rich’ to apply for NSFAS funding, yet too poor to afford university fees. Students with an annual household income of ZAR350,000 or less are eligible for NSFAS funding.

An estimated 350,000 students fall into the ‘missing middle’ and funding options are few compared with the need.

“The exclusion of the ‘missing middle’ was a major source of instability even before COVID-19,” Carolissen said.

“With COVID, we saw a massive increase in the number of applicants who had not previously qualified for NSFAS but, because of economic hardships, they now qualify.”

These are students who were already in the system and able to fund themselves in some way and COVID-19 triggered them to go below the threshold for funding, he added.

Professor Linda du Plessis, North-West University’s vice-principal, said the funding crisis was always going to unfold with or without the pandemic. “COVID just pushed it forward by a couple of years,” she said.

She brought numerous solutions to the table, with some already alluded to in the Heher Commission report, which includes loan schemes involving public-private partnerships; teaching relevant qualifications that tie in entrepreneurship and the value of upskilling and re-skilling; network partnerships that lead to collaboration and change in the operational model of universities.

Spaull said it is crucial to understand that a viable funding model should not just look to the government for funds but also at funds from private resources.