Free higher education: Crises that could have been foreseen – University World News

SOUTH AFRICA-GLOBAL

The protests were sparked by a combination of factors related to student fees and debt. The National Student Financial Aid Scheme (NSFAS) could not guarantee payment for all the first-year students who qualified to register, and some universities refused to register students with outstanding debt.

The University of the Witwatersrand declared that its outstanding student debt had reached ZAR1 billion (about US$68 million).

Responding to the turmoil at a number of campuses, and to a call by various student organisations to lock down all universities, a South African Sunday Times editorial on 14 March stated that yet again, the government gets a failing grade for its handling of student aid.

The editorial argues that, after raising the expectations of students by the #FeesMustFall protests in 2016 and the subsequent announcement in December 2017 by then president Jacob Zuma of free higher education for poor students, government should have sensed that the start of the academic year would be a critical moment, and should have prepared accordingly with care and sensitivity.

One would have expected the same level of preparedness by the universities, and that government and the universities would have been communicating about the spectre of student fees.

A failure of connectivity and policy

Another Sunday paper, City Press, followed a similar line on 14 March, stating lets end this annual ritual. It refers to the recommendations of the Heher Commission in 2017 that recommended a form of fee-free education while studying, but an income-contingent loan to be repaid after graduation at a low interest rate.

City Press elaborates that, on the morning of the ANCs elective conference during 16-20 December 2017, Zuma announced that the government would fully subsidise fee-free higher education for poor and working-class students.

The newspaper claims that Minister of Higher Education, Science and Technology Dr Blade Nzimande and the South African Treasury were blindsided by this announcement.

City Press claims that this promise was made in order to garner support for Dr Nkosazana Dlamini-Zuma in her contest with Cyril Ramaphosa for the presidency of South Africa at the 2017 ANC elective conference.

From evidence given at the Zondo Commission, which is a public judicial investigation into government corruption and fraud in South Africa, it is quite clear that Zuma, like many other presidents in Africa, offered students free higher education in order to gain support (or popularity) when he also knew that his cronies had been stealing the money that could have supported student financial aid.

Both newspapers imply that the latest crisis could have been anticipated by having a closer relationship with the students, and by having better information. In other words, the current protests could be seen as both a failure of connectivity and policy.

A brief history

In 1995, the late former president Nelson Mandela appointed the National Commission on Higher Education (NCHE) to develop a policy framework to transform higher education in the new South Africa.

The three central features to be addressed were increased and more equitable participation, greater responsivity to social and economic issues, and greater cooperation and partnerships in governance structures and operations.

The NCHE stated in its final report that student financial aid schemes would be a critical component to developing policies for a new higher education funding system.

The NCHE understood from the first day that higher education could not be transformed without a dramatic increase in participation by black students, and that this would require student financial aid.

The report identified the risk that, without financial support, progress achieved through public funding reforms could be negated by inadequate and ad hoc student financial aid policies that are at cross purposes with institutional and tuition fee policies.

It could be said that this is, to large degree, exactly what has happened.

The report also stated that student financial aid policies are important instruments in enabling key principles such as equity and developing human resources for development.

The NCHE proposed a mixed bursary and loan scheme, and emphasised that diversified ways should be explored to assist students to repay loans.

It also recommended that the scheme should be extended to part-time and private institutions.

Two central issues that the NCHE did not resolve are worth mentioning. The first was that, during 1995, Peter Scott, who interacted with the NCHE, published his influential book The Meanings of Mass Higher Education.

In it, he argued that, from evidence around the world, a central feature of socio-economic development was a differentiated and massified higher education system.

On the one hand, a much larger proportion of the population must obtain post-school education in order to respond to new higher level skill needs. Equally important is a differentiated system with higher education institutions that specialise in high-level professions and new knowledge production.

The notion of differentiation was strenuously opposed within the NCHE, particularly by the retired rectors of historically black universities who wanted redress, with the aim of South Africa having about 20 or so University of Cape Town-type universities.

There was strong support for massification within the NCHE, but the South African National Treasury was adamant that there were insufficient funds to support massification.

It could be argued that not accepting these two principles are at the heart of South Africas enduring student aid crises and contributes significantly to the stagnant economy.

Another proposition discussed within the NCHE, but not accepted by Treasury, was income contingent loans (ICL).

An international expert on student financing informed us that the Australian system is probably the best and most sustainable model: an ICL system which is fee-free while a student studies with loan repayment starting after graduation.

Special features included low repayments during the first 10 years with gradual increases thereafter. In some cases, repayment stretches out to near-retirement.

Since loan repayment is part of the tax system in Australia, students do not have to repay if they are unemployed or earn less than the taxable income threshold. However, if the student leaves the country, they have to repay the loan in full.

Another important feature of the Australian system is that it is handled by the countrys Treasury, which precludes the need for an additional NSFAS-type bureaucracy.

But, when consulting the South African Treasury in 1995, the response was that, with so many white employees leaving, or taking early retirement, they did not, and would not, have the capacity to deal with the additional administrative burden.

An Australian higher education expert claims that, 25 years later, their ICL system is making a significant contribution to increasing participation, and contributes to affordability and sustainability.

The student contribution to the overall funding of the universities is about 20%. (The current COVID-induced crisis in Australian higher education where many of the staff have been subject to salary cuts or even retrenchments is due to a shortfall in government funding and an overreliance on inflated fees for students from a number of Asian countries.)

The rise and the demise of NSFAS

NSFAS replaced, in 1999, the Tertiary Education Fund of South Africa when NSFAS was converted into a statutory body.

NSFAS transferred funds to the universities that then allocated money to deserving students. The main function of NSFAS was to decide on the allocation to each university and to collect the student loan repayments.

During its first phase in the early 2000s, NSFAS became a much-admired student grant and loan scheme, and was studied by a number of countries. Nicholas Barr from the United Kingdom pointed out that there have been few successful student financial aid schemes in developing countries.

However, by 2008, as the scheme grew, administrative problems began to emerge at NSFAS head office and at a few historically black universities.

Instead of providing these universities with administrative support, NSFAS was nationalised into a kind of state-owned enterprise, with an ever-increasing staff complement and rising student debt.

Following the establishment of the Department of Higher Education and Training, or DHET, in 2009, the Minister of Higher Education and Training at the time, Blade Nzimande, pressurised NSFAS board members to resign, although they were in the middle of a NSFAS review and the implementation of a turnaround strategy.

A new CEO, appointed through the cadre deployment process, was followed by the departure of some skilled staff. A former NSFAS employee described this process as the de-professionalisation of NSFAS.

The graph below should have been a signal that trouble was coming. It shows that, from 2009, there was a collapse in debt collection, and that, by 2014, uncollected debt had reached ZAR3.7 billion.

There was another signal that compounded the problem and should have set off even louder alarm bells, as illustrated in the graph below.

Governments contribution to university income increased from ZAR15.93 billion in 2000 to ZAR21.21 billion in 2013; as a percentage, it decreased from 49% to 40%.

Third-stream income almost doubled (from ZAR8.78 billion to ZAR14.26 billion), but remained at the same proportion (27%) of university income.

Student fees compensated for the decrease in government funding: in 2000, fees made up 24%, but by 2013, 33% of university income came from student fees. Over the same period, the proportion of students on NSFAS increased from 2% to 13%.

During the period 2000 to 2013, the average annual inflation rate for the country was roughly 6%, but, for the university sector, it was at around 11%.

A vice-chancellor at the time said that, with such a shortfall in the governments spending on higher education, the only way they could balance the books was by increasing fees.

What is often not discussed, are the levels of inefficiency and wasteful expenditure at South African universities.

At the same time, the government drastically increased funding available to NSFAS from ZAR1.4 billion in 2010-11 to ZAR3.9 billion in 2014.

The combination of the de-professionalising of NSFAS as an organisation, reducing its debt-collecting powers and flooding it with new money overwhelmed the organisation.

These problems escalated with the significant increase in government funding to ZAR24 billion in 2019-20, and an astronomical increase from ZAR4.3 billion in 2016-17 to ZAR24 billion in 2019-20 (see the Medium-term Expenditure Framework or MTEF allocation below).

As early as 2018, pressure started mounting for then minister of higher education Naledi Pandor to fire the chief executive of NSFAS and disband its board following the ongoing challenges in disbursing money for students who were promised free education.

During 2020, parliamentary oversight committees heard that the 2018-19 and 2019-20 financial years had been the worst in NSFASs administration: Year after year, from that period, the situation worsened. This is the period in which the entity was under an administrator who was supposed to turn it around, but worsened it.

This escalated as parliament decided in November 2020 to hold an inquiry into NSFAS corruption allegations, which included aspersions that the student scheme administrator hired friends and acquaintances without following due process.

On 10 March 2021, as student protests started on South African campuses, the Select Committee on Education and Technology, Sports and Arts and Culture heard that irregular and wasteful expenditure continues to emerge as NSFAS accounts are reconciled.

The chronic state of maladministration within the financial aid scheme resulted in irregular expenditure that amounted to ZAR7.5 billion in 2017 and 2018.

The auditor general also highlighted the problem of the failure of NSFAS to consult the minister in revising the criteria and conditions for loans and bursaries in 2018-19 and in 2019-20, and that resulted in NSFAS carrying irregular expenditure of ZAR50 billion.

In a recent television interview, the former statistician-general, Dr Pali Lehohla, said that NSFAS is unnecessary; as is the case with a number of other state-owned enterprises, and there are better and more efficient ways of dealing with student financial aid.

Elites are tight-fisted

Sociologist Manuel Castells states that one of the four important functions of the university is to select a meritocratic elite.

Elaborating on a version of elite selection in Africa, renowned scholar Mahmood Mamdani, in his book Scholars in the Market Place: The dilemmas of neo-liberal reform at Makerere University (2008), states that: The purpose was to train a tiny elite on full scholarships which included tuition, board, health insurance, transport and even a boon to cover personal needs ... from the perspective of the student this was an extraordinary opportunity; from the view of society, an extraordinary privilege.

The generosity to the elite expanded as pressure mounted to take in more students. This had two consequences. When Makerere University could not afford to pay its staff, it introduced a two-tier system: free public higher education during the day and private fee-paying students in the evening.

By 2008, Mamdani described this commercialisation of Makerere as a devaluation of higher education into a form of low-level training with no research.

It is only in very rich countries such as Norway that the system can massify and be free.

Norway is not simply rich, it is one of the most equal societies, it has almost full employment, and one of the highest tax recoveries in the world with oil and salmon as a backup.

In South Africa, a university education is close to the apex of elite formation. See below the progression from starting school to graduating.

Globally, and in Africa, there are considerable benefits to obtaining a university degree. Graduate employment is at more than 90%, and in some fields close to 100%.

According to a World Bank report, in Sub-Saharan Africa, private returns to higher education are higher than returns to primary and secondary education.

The region with the highest private returns to higher education is also Sub-Saharan Africa. South Africa, a country with the highest level of inequality in the world, also has the highest private returns to higher education in the world.

In response to this data, former statistician-general Pali Lehohla said in 2016 that there is no such thing as free higher education and that the term should be banned.

He added that, considering the high private returns and the fact that South Africa has such high graduate employment, the fees policy question is: Do students pay while at university or while they are working?

Of course, throughout history, the elite resist paying back, even when it is obviously harming the lower classes, and ultimately their own privileges.

In many African and other countries, this takes place even if it collapses the education system. It is at that point that the elite of the elite send their children overseas.

What to do?

What did China do? The Chinese government responded to the Tiananmen Square youth protests with a new higher education law in 1995, which declared higher education a pillar of socio-economic development.

Three main strategies were:

Massification (participation increased from about 15% to more than 50%) but with strong differentiation (China selected and funded 100 world-class universities);

A dramatic increase in government spending on higher education, from under 1% to 3.5% of GDP;

Introduction of tuition fees with a loan scheme (Rural Credit Cooperatives supported by the China Development Bank with 10- to 15-year repayment periods).

The Chinese put massive funding into Project 211 and then Project 985 to develop 112 top-class universities at international level.

They called it From National Elite to World-Class. In 2020-21 China had 15 universities in the top 100 world rankings. No other developing country, including South Africa, has one.

In 2018 China enrolled 95,502 new PhD students. Massifying with strong postgraduate programmes is key to development.

China achieved the fastest expansion of undergraduate and postgraduate students in the history of higher education.

When China was a tuition-free elite selection system, it was a third-class system with a few elite universities, but none were rated as world class.

What the Chinese model shows is that higher education is not just a free path out of poverty into the elite, it must be one of the pillars of socio-economic development with a pact between different role players.

One of our problems is that, currently, South Africas ruling party does not even have a pact with itself.

The Heher Commission proposed an income-contingent loan system, which takes students circumstances into account and ensures a more sustainable system with government contributing close to 3% of GDP while student repayments contribute 20% of the higher education budget.

The commissions proposal would result in fee-free education for some students who do not, in the course of their careers, reach an income threshold appropriate for a repayment obligation.

Application and registration fees would be scrapped across the board, and students with debt, who have graduated, would be offered income-contingent loans as well.

It was also recommended that tuition fees (and residence fees, if applicable) should be paid directly to the institution at the start of the academic year, and that the participation of NSFAS in the funding of university students be replaced with income-contingent loans administered by South Africas Treasury.

NSFAS could be retained, in a much scaled-down version, to assist with the provision of the funding for technical and vocational education and training students, if such retention is considered necessary. This proposal is very close to the tried and tested Australian model.

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Free higher education: Crises that could have been foreseen - University World News