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09 April 2021 | Story Prof Francis Petersen and Prof Philippe Burger | Photo istock

With a COVID-hit, shrinking economy and a mounting public debt burden, the Minister of Finance, Mr Tito Mboweni, announced a tight budget in February 2021. This budget also constrained its allocation to the Department of Higher Education and Training (DHET).

Within the DHET budget, the allocation to the National Student Financial Aid Scheme (NSFAS) was set to increase from R34,8 billion in the 2020/21 fiscal year to R36,4 billion in 2023/24 – a cumulative increase in nominal terms of 4,6% over the three-year period. This allocation covers NSFAS bursaries to university students and students at technical and vocational education and training (TVET) colleges. 

However, the National Treasury’s Budget Review projected inflation at 3,9%, 4,2% and 4,4% in the three fiscal years from 2021/22 to 2023/24. This means that the consumer price level over the three years is expected to cumulatively increase by 13%, well in excess of the 4,6% increase that the government has budgeted for NSFAS. In addition, the government also expected the number of NSFAS students to increase.

Reallocation of the DHET budget

Predictably, student organisations countrywide have expressed their dissatisfaction, which led to protests and campus shutdowns in March 2021. Tragically, a bystander in the protests, Mthokozisi Ntumba, died during police action in Braamfontein. 

Following the protests, the Minister of Higher Education, Innovation and Technology, Dr Blade Nzimande, announced a reallocation of the DHET budget, as approved by Cabinet. A further R6,3 billion has been allocated to NSFAS. A total of R2,5 billion of this reallocation came from a reduction in the general allocation for universities, R3,3 billion from the National Skills Fund, and a further R500 million from the TVET colleges’ new accommodation construction budget.
The provision of university subsidies was already a concern before this reallocation, with the subsidy per student in real terms in the DHET budget set to drop cumulatively by as much as 7% over the period 2020/21 to 2023/24.
In addition to the subsidy and bursary pressures, student organisations are also demanding the full write-off of student debt. Outstanding student debt at South African universities stands just shy of R14 billion. Much of this debt burden is carried by students from so-called missing-middle households, defined as households with an income of between R350 000 and R600 000 per year.  

The current funding model is not financially and fiscally sustainable

With mounting financial pressure, it is clear that the current model of student funding in South Africa is not financially and fiscally sustainable. The deteriorating fiscal condition also makes it unlikely that the government will be able to fully finance the missing middle. Minister Nzimande has indicated that a National Task Team, involving various stakeholders, will be established to address the student funding challenge in a sustainable manner.

The National Task Team will have to revisit the recommendations made by the Heher Commission in 2016. The commission recommended the implementation of an income-contingent student loan scheme. With an income-contingent loan, the student will obtain a loan to cover all or part of his or her tuition, accommodation, books, living costs, and transport. 

Once a student has finished studying and started working, loan repayment can start, but it only commences when the income exceeds a set threshold. The amount paid per month is also linked to the ex-student’s income level. The loan repayment period can be capped, for instance, at 25 or 30 years. Whatever is not repaid after that, is written off.
Such a loan scheme could augment a revised NSFAS bursary scheme, and instead of the hard R350 000 family income cut-off currently applied for NSFAS bursaries, it could be implemented with a sliding family income scale that allows for a combination of bursary and loan financing. Thus, poorer students will receive a bigger or full bursary, reducing their need for a loan, while better-off missing-middle students will need to obtain a partial or full loan. 

Will students be able to afford the debt burden they incur with such loans? In 2019, BusinessTech conducted a survey among eight large South African universities to ascertain the range of tuition fees that students face per year in BA, BCom, BSc, LLB, and BEng degrees. 

Annual tuition fees ranged from R32 560 to R68 135. In 2020 and 2021, universities applied an increase of 5,4% and 4,7% in tuition fees, respectively, which lifts the range to R35 931 and R75 190 in 2021. Setting the allowance for transport, living costs, books, and personal care equal to the 2021 NSFAS allowance of up to R30 600 and assuming accommodation costs of R35 000 for ten months, means the total tuition fees and other costs will range between R101 531 and R140 790 per year. 

If this was the cost for the first year of study, allowing for further tuition fee increases of 4,7% per year for a second (2022) and third (2023) year, and 4% inflation for all other costs, the total cost over three years with a degree obtained at the end of 2023, will range between R317 716 and R441 113, to be repaid over 10 to 30 years. Note that this cost is the same order of magnitude as the current retail price of R376 500 for a Corolla 1.2T Xs, a mid-size family car typically bought by middle-class (including graduate) families. The car, though, is repaid over just five years.

A need for public-private partnership

Given the limits on government finance, even to fund all income-contingent loans, there is a need for significant private sector involvement (banks, pension funds) in funding the loan scheme. If 300 000 students each incur a loan averaging R120 000 per year, the cost would be R36 billion per year (and at a GDP of R5 trillion, be 0,7% of GDP), an amount that is surely feasible when combining government and private sector resources. Universities are institutions that affect social change and are drivers of economic growth. Hence, both the public and private sectors are key beneficiaries of the output of universities, and therefore a solution towards sustainable student finance will need to involve an appropriate public-private partnership.  

Such a public-private partnership can include a sliding scale of interest paid on the income-contingent loans, based on the student’s household income, coupled with a partial or full underwriting of the loan by government.

Commercial banks can administer the loan scheme, as they already have well-developed financial vetting systems and expertise. To reduce the risk of non-repayment, and because the loan repayment is linked to a worker’s income level, the South African Revenue Service can collect instalments and pay it over to the loan scheme.

There are, however, a number of factors that can undermine the successful implementation of an income-contingent loan scheme. These include the lack of collateral and the long lead time till repayment starts, the need to subsidise low interest rates, and lastly, the risk of low total repayments. All these will require that the government spends money to ensure the participation of banks and other funders. 

The private sector, though, needs to realise that even though a student loan system inevitably involves risk, it is in the interest of the long-term growth and profitability of the private sector to fund such loans. It is also important for government to realise that higher education is both a private and public good, and that contributing a component to student finance is an investment, and not merely an expenditure.

Prof Francis Petersen is Rector and Vice-Chancellor of the University of the Free State and  Prof Philippe Burger is Professor of Economics and Pro-Vice-Chancellor: Poverty, Inequality and Economic Development at the University of the Free State

News Archive

Gender bias still rife in African Universities
2007-08-03

 

 At the lecture were, from the left: Prof. Magda Fourie (Vice-Rector: Academic Planning), Prof. Amina Mama (Chair: Gender Studies, University of Cape Town), Prof. Engela Pretorius (Vice-Dean: Humanties) and Prof. Letticia Moja (Dean: Faculty of Health Sciences).
Photo: Stephen Collett

Gender bias still rife in African Universities

Women constitute about 30% of student enrolment in African universities, and only about 6% of African professors are women. This is according to the chairperson of Gender Studies at the University of Cape Town, Prof Amina Mama.

Prof Mama was delivering a lecture on the topic “Rethinking African Universities” as part of Women’s Day celebrations at the University of the Free State (UFS) today.

She says the gender profile suggests that the majority of the women who work in African universities are not academics and researchers, but rather the providers of secretarial, cleaning, catering, student welfare and other administrative and support services.

She said that African universities continue to display profound gender bias in their students and staffing profiles and, more significantly, are deeply inequitable in their institutional and intellectual cultures. She said women find it difficult to succeed at universities as they are imbued with patriarchal values and assumptions that affect all aspects of life and learning.

She said that even though African universities have never excluded women, enrolling them presents only the first hurdle in a much longer process.

“The research evidence suggests that once women have found their way into the universities, then gender differentiations continue to arise and to affect the experience and performance of women students in numerous ways. Even within single institutions disparities manifest across the levels of the hierarchy, within and across faculties and disciplines, within and between academic and administrative roles, across generations, and vary with class and social background, marital status, parental status, and probably many more factors besides these”, she said.

She lamented the fact that there is no field of study free of gender inequalities, particularly at postgraduate levels and in the higher ranks of academics. “Although more women study the arts, social sciences and humanities, few make it to professor and their research and creative output remains less”, she said.

Prof Mama said gender gaps as far as employment of women within African universities is concerned are generally wider than in student enrolment. She said although many women are employed in junior administrative and support capacities, there continues to be gross under-representation of women among senior administrative and academic staff. She said this disparity becomes more pronounced as one moves up the ranks.

“South African universities are ahead, but they are not as radically different as their policy rhetoric might suggest. A decade and a half after the end of apartheid only three of the 23 vice-chancellors in the country are women, and women fill fewer than 30% of the senior positions (Deans, Executive Directors and Deputy Vice-Chancellors)”, she said.

She made an observation that highly qualified women accept administrative positions as opposed to academic work, thus ensuring that men continue to dominate the ranks of those defined as ‘great thinkers’ or ‘accomplished researchers’.

“Perhaps women simply make realistic career choices, opting out of academic competition with male colleagues who they can easily perceive to be systematically advantaged, not only within the institution, but also on the personal and domestic fronts, which still see most African women holding the baby, literally and figuratively”, she said

She also touched on sexual harassment and abuse which she said appears to be a commonplace on African campuses. “In contexts where sexual transactions are a pervasive feature of academic life, women who do succeed are unlikely to be perceived as having done so on the basis of merit or hard work, and may be treated with derision and disbelief”, she said.

She, however, said in spite of broader patterns of gender and class inequality in universities, public higher education remains a main route to career advancement and mobility for women in Africa.

“Women’s constrained access has therefore posed a constraint to their pursuit of more equitable and just modes of political, economic and social development, not to mention freedom from direct oppression”, she said.

Prof Mama concluded by saying, “There is a widely held agreement that there is a need to rethink our universities and to ensure that they are transformed into institutions more compatible with the democratic and social justice agendas that are now leading Africa beyond the legacies of dictatorship, conflict and economic crisis, beyond the deep social divisions and inequalities that have characterised our history”.

She said rethinking universities means asking deeper questions about gender relations within them, and taking concerted and effective action to transform these privileged bastions of higher learning so that they can fulfil their pubic mandate and promise instead of lagging behind our steadily improving laws and policies.

Media Release
Issued by: Mangaliso Radebe
Assistant Director: Media Liaison
Tel: 051 401 2828
Cell: 078 460 3320
E-mail: radebemt.stg@ufs.ac.za  
02 August 2007
 

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