Universal free tertiary education will not be feasible in the foreseeable future, and different funding models should be adopted to ensure access for all deserving students, according to the Heher commission’s recommendations.

The long-awaited 748-page report by the commission of inquiry into higher education and training – which City Press has in its possession – has instead suggested a multipronged and multilayered approach which will take into account South Africa’s struggling economy and competing demands on the fiscus.

Headed by retired judge Jonathan Heher, the commission was set up following the first eruption of the #FeesMustFall protests two years ago. The report examined 20 different scenarios of funding compiled by evidence leaders.

Since receiving the report from Judge Heher on August 30, President Jacob Zuma has resisted calls to release it, with the presidency saying he is still studying its contents.

Zuma’s hogging of the report has frustrated students and university management, as well as his own department of higher education and training.

This week, students at several institutions began protesting against fee-increase proposals tabled by their universities and demanding the release of the report.

In Cape Town, they clashed with police following a march on Parliament during Finance Minister Malusi Gigaba’s medium-term budget speech.

More protests are expected this week across the country.

Last week, axed higher education minister Blade Nzimande made a shocking revelation in an exclusive interview with City Press that Zuma withheld the report from him. It then dawned on him that his days in Zuma’s Cabinet were numbered.

The presidency issued a statement yesterday, saying it was “working on the report” and “finalising the processing” and consulting with relevant ministers.

“The consultations with relevant ministries is at an advanced stage and it is expected that it will be finalised during the course of next week,” said presidential spokesperson Bongani Ngqulunga.

Among the main recommendations of the Heher commission report are:

- A “cost-sharing model”, in terms of which the government commits to spending a fixed 1% of the gross domestic product (GDP) to subsidise universities, with students paying fees according to a “fair and affordable” structure regulated by the Council on Higher Education.

- An “income-contingent loan” (ICL) system, in terms of which students would repay their debt based on their post-qualification salaries. This would, in effect, replace the National Student Financial Aid Scheme (Nsfas).

In terms of the ICL-based system, there will be some students who receive a free education because their careers will not reach a threshold that triggers a repayment obligation.

- The total scrapping of registration fees – a long-term bone of contention that fuels protests at the beginning of each year.

- A “fee-free” structure for Technical Vocational Education and Training (TVET) college students, who tend to come from poorer backgrounds, with 100% funding coming from the department of higher education and training.

- The introduction of a stipend for TVET students.

- Ring-fencing R50bn from the surplus in the Unemployment Insurance Fund for infrastructure spending on the TVET sector, which looks after vocational and training colleges.

- Increasing the government subsidy for the university sector to 1% of GDP.

- Channelling unclaimed pension benefits into the university sector to stabilise the ICL system.

- The establishment of an education fund for companies, individuals and international aid organisations to donate money towards higher education.

- That universities intensify their efforts to raise money from their alumni, as is the case in developed countries.

- That Sector Education and Training Authorities be streamlined and made efficient, and that savings be channelled to improving teaching and curriculum development at TVET colleges.

WOULD THE LOAN SYSTEM WORK?

In its analysis done for the commission, the Actuarial Society of SA said if grant funding were to replace fees – as demanded by student organisations and other lobbyists – a 70% budget increase would be required for post-school education in the 2017/18 financial year. This would be at the expense of the state’s other spending priorities.

The analysis also raises caution about the ICL mechanism, warning that, because of the long repayment period, it may take up to 30 years for the system to be self-sustaining. It also remarks about the probability of loan abscondments.



“Loan-based funding ... would be effective only if there is an effective collection method for recovering loans after students have graduated or dropped out,” argues the actuarial society.

This warning echoes concerns expressed in 2016 by Nsfas chairperson Sizwe Nxasana, who said the scheme had only managed to recover R200m of the R21bn it had lent out since inception.

The commission says that, in order to tighten the process, the repayment system should happen through the SA Revenue Service (Sars) and that as soon as the loan is granted, a student should register as a taxpayer so that Sars can hold them accountable.

WILL THE BANKS PLAY BALL?

In a letter to the commission responding to the loan scheme proposal in the same report, Banking Association SA (Basa) appears not to be sold on the ICL idea.

Basa’s managing director, Cas Coovadia, tells Heher in the May 2017 correspondence that a task team – made up of the big four banks and Basa officials – found that the information was insufficient to make a decision.

He says while the sector appreciates the “importance as well as the urgency of the matter” and wants to assist in finding a solution, “for banks to commit to a proposal of this nature, a comprehensive financial model would need to be developed in order to assess its feasibility”.

However, he commits the banks to working with the commission “to develop a financial model that would enable an assessment of viability and feasibility of the proposed scheme”.

FISCAL HEADACHE OF BALANCING NEEDS

In his medium-term budget speech this week, Gigaba undertook to make “further announcements” on higher education funding in the 2018/19 budget in February.

Gigaba pointed out that if government were to finance the full cost of study for 40% of undergraduates in South Africa, it would create a funding shortfall of more than R61bn over the next three years.

On the other hand, paying the full cost of study for all students of TVET colleges would require a total of R23.5bn over the next three years.

In making its recommendations, the Heher commission says “any financial decisions must take into account the education sector as a whole”, and not just focus on universities.

It points out that early childhood education is in “dire need of development”, school education remains unequal and community education and training centres, as well as TVETs, are in “dire need of funding”.

“It is also clear that all funding decisions are political in nature, and the government must weigh the competing demands for education with those for basic services, social services, housing, etc,” it says.

Remarking that increasing enrolment has reduced per capita over the past 20 years, the report says: “This situation is unsustainable and has disastrous consequences for the sustainability of institutions.”

It says funding models should not focus just on tuition, but should also take into account accommodation and other student needs.

A BIG TENT

Interestingly, the commission recommends that the ICL be applied to students enrolled at private institutions because “they are citizens and residents with full constitutional entitlement” and because they will be valuable to the economy once they graduate.

Postgraduate students will also have access to ICL.

The category of students that will not be able to access the ICL will be foreign students.

HISTORIC DEBT

The other annual headache for universities is historic debt incurred by students who are unable to meet their obligations because of the underfunding of Nsfas students and the so-called “missing middle” students, who are neither rich enough to afford fees nor too poor to receive assistance.

Every year, universities either face protests or write off huge amounts of debt. Hard hit by this crisis is the TVET sector, which “has a significant number of poorer students who cannot afford the cost of education”.

The commission believes the cost-sharing model will alleviate this problem. It also recommends that students who have already graduated be given the ICL loans.

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