SA varsities intent on pursuing millions in unpaid fees

Amid a troubled start to the 2022 academic year during which student protests erupted on several campuses over financial exclusions, debt-ridden South African universities have said they have no intention of writing off unpaid student fees, insisting that they will continue to do all that is possible to recover hundreds of millions of rands owed to them.

The country’s 26 public institutions are collectively owed between ZAR10 billion (US$647 million) and ZAR14 billion (US$905 million) in unpaid fees, a situation resulting in their being unable to survive without money from the fiscus, affecting them on an operational level, impacting on their ability to attract and retain the best academics, and threatening their sustainability in the long term.

Although Finance Minister Enoch Godongwana announced a ZAR32.6 billion (US$2.1 billion) contribution to the National Student Financial Aid Scheme (NSFAS) in his budget speech at the end of February, which will help to alleviate the scheme’s shortfalls, the need for a sustainable student funding model for South African higher education remains.

NSFAS is the government-funded financial support scheme for students with a household income of up to ZAR350,000 (US$22,600) per annum.

In the meantime, several South African universities indicated to University World News how they are combining a variety of strategies to collect the debt, ranging from the use of debt collectors and legal action, to ongoing personal communication with students and special arrangements to assist those who are in arrears.

University of Johannesburg

Student debt at the University of Johannesburg (UJ) currently stands at ZAR580 million (US$37.5 million) owed by 2021 registered and non-registered students – a slight increase compared with the previous year.

The university requires students to sign an acknowledgment of debt and 50% of outstanding fees must be paid up-front before registration. If needed, the university can take legal action against students owing it monies.

While the university withholds results in certain instances, it makes provision for the acknowledgment of debt for owing students to enable them to register for the new academic year.

“UJ is very sympathetic towards students who are academically deserving and who are not able to fund their studies.

“UJ has ongoing initiatives to obtain bursaries for our students to reduce their debt. The university continuously engages corporates, the Sector Education and Training Authority (SETA, which is funded through levies by employers), and local and national government departments to fund our students,” said Professor Tshilidzi Marwala, the vice-chancellor.

He adds that UJ raises funds to assist academically-deserving ‘missing middle’ students. Between 2016 and 2020, UJ raised ZAR916 million, which covered tuition and living expenses for 13,978 students.

The ‘missing middle’ comprise students deemed too poor to afford higher education, yet not poor enough to qualify for funding through NSFAS.
Marwala said unpaid student debt is a risk for most higher education institutions, UJ included, impacting on the university’s operations because the monies owed for tuition contribute towards the efficient and effective running of the university.

University of Cape Town

Nombuso Shabalala, a spokesperson for the University of Cape Town (UCT) said it was currently owed ZAR167 million (US$10.8 million) in student fees, and the cumulative debt over the last few years stood at ZAR296 million.

Shabalala said UCT follows the debt recovery processes set out in the law.

She said UCT is committed to helping students who cannot afford fees, if they meet the financial criteria and show good academic progress.

The total financial assistance package provided in 2021 to UCT students is more than ZAR1.7 billion (US$110 million).

However, given the situation’s futility, the figures are unaudited and subject to change. For example, some outstanding payments from NSFAS and government departments for 2021 fees were only paid to UCT in 2022. Some remaining sponsors have provided letters confirming that payment will be made later in 2022.

Sefako Makgatho Health Sciences University

Sefako Makgatho Health Sciences University, north of Pretoria, said its debt was ZAR477.3 million (US$28.9 million) at the end of 2021.

The university has recently acquired the services of a debt collector to assist, which is bearing fruit, using internal resources to call and send reminders to students; addressing historical debt claims from NSFAS; negotiating with financial institutions to fund the ‘missing middle’ students, and providing merit awards to students deemed outstanding performers.

Eminos Manyawi, the chief financial officer, said it would be “imprudent, unsustainable, and uneconomical” for the institution to write off debt.

“As evidenced by the response to the debt collector’s efforts, most former students [can] afford to pay their historical debt.”

He added that as a historically disadvantaged institution, the university does not have reserves to run its operations.

“The university is often challenged to meet its plans and obligations regarding operational costs, such as maintenance, paying its creditors and salaries to its employees. For this reason, the universities, in general, have become overly reliant on the fiscus, a situation that is unsustainable in the long run,” he said.

Durban University of Technology

At the end of 2021 the amount owed in unpaid student fees to the Durban University of Technology (DUT) was ZAR960 million (US$62 million). The debt for 2021 was ZAR408 million. The deficit from 2016 to 2020 totalled ZAR497 million.

The university has debt collection strategies. “We reassess the students’ financial situation and ability to pay back, and we then grant extended payment plans to qualifying students. It strains the university’s cash flow, and if the debt continues to increase, it will affect the future sustainability of DUT,” said Noxolo Memela, the communications manager at DUT.

North-West University

The outstanding balance for student debt at North-West University (NWU) on 31 December 2021 amounted to ZAR269 million (US$17.4 million), ZAR221 million for 2021and ZAR48 million from previous years.

The university handed over ZAR51 million of bad debt to debt collectors in 2021 and ZAR55 million in 2020.

Students with outstanding debts cannot register for their continuing year of study.

Still, the university enables students to set up a feasible payment arrangement for other reasons, such as to enable them to complete the final year if they have to do only a few modules. This is handled on a case-by-case basis and only on merit.

Certificates and diplomas of students who have graduated with outstanding debt are withheld.

However, the NWU said it confirms the qualification directly to potential employers when they want to apply for a job. The outstanding debt of unregistered students is handed over annually to debt collectors, who also check with the South African Revenue Service (SARS) for employment status.

Louis Jacobs, the director of corporate communication at NWU, said while the current economic downturn due to COVID-19 has intensified the financial challenges, another possibility is that the NSFAS funding model could become a loan scheme (as it was initially when it was introduced) and not a bursary fund, for money to flow back to the scheme when these students enjoy employment, and it can then be expanded to the so-called ‘missing middle’.

Sol Plaatje University

By 2020, student debt at the relatively new Sol Plaatje University (SPU) accumulated from 2014 to an amount of ZAR58.2 million (US$3.7 million).

For the 2021 financial year, the recorded gross due student debt is an unaudited figure of ZAR65 million and estimated growth in debtors for 2021 is around ZAR7 million.

Most SPU students are funded through NSFAS.

The university is continuously engaging with NSFAS and other funders to resolve matters about outstanding debt. Students are required to sign an acknowledgment of debt and make payment arrangements if they cannot pay outstanding debt.

Rhodes University

Veliswa Mhlope, a spokesperson at Rhodes University, said the institution was owed ZAR308 million (US$19.8 million) in unpaid fees, of which ZAR208 million was historical debt.

Mhlope said the university endeavours to recover debts via a recovery agency, targeting former students engaged in formal employment.

She said the university does not advocate the writing off of historic debt as this would impact the university’s operations, placing it in an unsustainable situation as a second stream income is vital to the financial well-being of the university.

Without the income, infrastructure maintenance and expansion as well as the ability to attract staff with competitive remuneration packages are impacted.

University of the Western Cape

Nashira Davids, a spokesperson for the University of the Western Cape, said debt for 2021 stood at ZAR142 million (US$9.1 million), while the figure for 2020 was ZAR50 million, and historical debt was ZAR291 million.

Davids said students and financial sponsors are constantly updated with statements of accounts via their student portal, email, and post.

Students with debt are also encouraged to consult student credit management about affordable payment arrangements over an extended period.

Davids said the university is sensitive to the economic climate and profile of students that it serves and does not exclude students based on outstanding fees.

University of the Free State

Lacea Loader, the communication director at the University of the Free State (UFS) said the total outstanding student debt on 31 December 2021 was ZAR261 million (US$16.8 million).

There are no fees older than two years outstanding.

A debt recovery strategy is applied that includes multiple communications to students, mailing monthly accounts, assistance with the administration of bursaries by third parties, and personal engagement with students regarding their financial ability and that of their family.

She said universities do not have the regulatory support to recover debts like the electricity provider Eskom, SARS, or public broadcaster SABC have.

Therefore, universities’ efforts are more focused on the recovery attempts and, as a last resort, by withholding results and qualifications.

Students are assisted with qualifications when applying for jobs with prospective employers.

The UFS has further introduced a provisional registration process that allows students with less than an approved debt balance to register with a minimum amount and pay the balance to secure their registration within the first quarter of an academic year.

Nelson Mandela University

Zandile Mbabela, the Nelson Mandela University (NMU) spokesperson, said a significant challenge that arises at the start of each academic year relates to student funding, enabling several processes such as educational and residence registration and the disbursement of allowances to funded students.

As of the end of December 2021, NMU was owed ZAR322 million (US$20.8 million).

However, she points out that the university has always been committed to social justice. To this end, the university attempts to widen access to higher education for students from poor and working-class backgrounds.
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The resolve to widen access to higher education includes institutional efforts to ensure that academically deserving, financially needy students are not denied higher education due to financial constraints. As such, the institution has made available several economic concessions since 2016.

The benefits are granted to qualifying, academically deserving students who are unfunded and whose family income does not exceed ZAR600,000 (US$38,800) per annum.

This allows the student to register with outstanding debt and be exempt from down payments for tuition and on-campus accommodation.

In addition to debt collectors, indebted students’ academic records and certificates are released once they have settled their debt.

Stellenbosch University

Martin Viljoen, a spokesperson for Stellenbosch University (SU), said it was committed to the long-term financial sustainability of the institution.

In this regard, the university has extensive annual planning measures to allocate funds for financial assistance in a sustainable manner.

It remains committed to working with the higher education sector to find systemic and sustainable solutions to ensure economic sustainability for universities and access to higher education for our students.

At the end of 2020, the historical debt was ZAR367 million (US$23.7 million) and figures for 2021 had not been finalised, but for the graduating class of 2021 debt stood at ZAR16.3 million (US$1 million).

Also, the university is in the process of partnering with most major banks to provide exclusive student loan options at a preferential interest rate and terms to qualifying students.

The university is also in close contact with student leaders on issues about student funding and to address, where possible, issues at hand.

An ad hoc task team is activated too, where possible, to assist students with student debt on a one-to-one basis.

The university follows the debt collection procedures strictly, as prescribed by the National Credit Act. Therefore SU cannot write off debt to ensure the long-term sustainability of the institution, added Viljoen

University of the Witwatersrand

Buhle Zuma, a spokesperson for the University of the Witwatersrand (Wits), said at the end of 2021 the accumulated opening balance owed to Wits was ZAR968 million (US$62.5 million).

As with every other year, this amount usually decreases to approximately ZAR200 million per annum, on average, as students pay to register, and with debt collection processes and the payment of bursaries and scholarships by government and corporates.

Zuma said Wits is cognisant of the economic realities that many students and families face, especially because of the COVID-19 pandemic, making numerous concessions and entering repayment plans with students where possible.

The ‘missing middle’ remains a challenge for universities like Wits – students who cannot afford to pay their way and do not qualify for financial aid from the state.

“Wits administers over ZAR1 billion in bursaries, scholarships and financial aid annually, but it is still not enough – we need more funding for talented students. We have established a multimillion-rand Wits Hardship Fund to assist students to register and to pay for residence fees,” said Zuma.

Until a solution for the debt can be found, the annual tension over fees at the start of the South African academic year is expected to continue.