South Africa’s government is planning a major overhaul of its student funding system. This comes in the wake of protests at the country’s universities that saw students successfully freeze fee increases for the 2016 academic year.

Government aid has been available to poor students for a number of years through its National Student Financial Aid Scheme (NSFAS), which falls under the Department of Higher Education and Training. But the scheme’s definition of “poor” – a family income of less than R120,000 (about US$8,287) per year – has left the country’s “missing middle” stranded. These young people make up the bulk of the school-leaving population each year. Their parents are teachers, nurses, police and other civil servants whose annual income (on average between R151,728 and R363,930) is above the NSFAS threshold but not high enough to afford university fees. As Rhodes University vice-chancellor Dr Sizwe Mabizela has pointed out:

This means you have to be desperately poor or wealthy to afford higher education in South Africa.

The proposed overhaul will see NSFAS’ household income threshold rise to R500,000. This should see many more deserving students get a shot at a university education, though where the university places will come from in an overstretched system is entirely unclear.

At the same time, government plans to centralise student funding. Universities will lose their power to allocate student funds, and instead NSFAS will control student funding directly.

To date, universities have managed their own NSFAS funds. This has been marred by financial mismanagement and allegations of fraud and nepotism at a number of universities.

Such changes seem positive. However, there is nothing to guarantee that these reforms will be effective in supporting students. There appear to be four main hurdles to ensuring that student funding is equitable and efficient, which we will explore in this article. Crucially, these reforms will only work if student funding is opened to public scrutiny and participation.

Hurdles to equitable student funding

So what’s holding student funding back?

Government capacity: how will the Department of Higher Education implement a complex grant of this magnitude given its other priority functions? In 2014, universities administered R9 billion in NSFAS funding to more than 400,000 students. How will NSFAS build the structures and the competencies to go from managing zero students to managing 400,000? And if universities are mismanaging relatively small pots of funding, what is to prevent a national office from mismanaging a much larger central fund, which is more complex and difficult to oversee? Indeed, NSFAS has struggled to both disburse funds and recover debt. Student care: When universities manage NSFAS funds, students have direct access to financial aid services and counselling related to the process. This is important because most young people entering universities are the first in their immediate families to do so. They need care and support to navigate university life and student funding. How will NSFAS provide such “care services” from a central office and ensure that students are not further alienated by red tape? Local knowledge and decision-making: The academics and support staff at each institution have local, particular knowledge of students’ strengths and weaknesses and the difficulties of each course. They sometimes admit students who are failing on paper, understanding that in practice and with sufficient support such students will succeed. Will the central management of student funding affect universities’ admission and selection criteria? Will deserving students be excluded, or will these students be forced into courses that they do not want to or cannot do? Institutional autonomy is central to the functioning of universities as a critical space. If the government begins to dictate who should be allowed access to universities, this autonomy will be lost. Trade-offs in funding: There are two ways to fund more students. Either university costs go down or the national higher education budget goes up. If additional money for NSFAS comes from within the existing higher education budget, then university costs will have to go down. This has enormous implications for quality. Austerity measures, in the form of voluntary retrenchments, are already being implemented in some universities. The casualisation of academic staff is in full swing, with more than 50% of academics in South Africa working on a contract basis. How can these processes be squared with student demands for a complete overhaul of the curriculum, the insourcing of workers and support for black academics? On the other hand, the national budget for higher education could increase. South Africa spends only 0.71% of its gross domestic product on higher education, compared with double or more spent by countries like India, the US, Australia, Ghana and Malaysia. But next year there will probably be less money in the budget. The economy is stagnant and the price of borrowing will likely increase substantially if South Africa’s credit rating is cut to junk status. Where will the money for an increase in NSFAS funds come from?

Public scrutiny is key

These hurdles can only be overcome if citizens have the information and the right to participate in setting the budget and overseeing NSFAS. At the moment the process is almost entirely limited to a small number of government and university bureaucrats.

The first step to deepening democratic participation would be for Higher Education Minister Dr Blade Nzimande to provide full information about the forensic audit to probe alleged malpractices in NSFAS. There is no transparency about who is carrying out the audit, what their terms of reference are, expected penalties and remedial action, or even the deadline for findings.

The second step is for NSFAS to make public its detailed financial records so that citizens can identify delays in distributing NSFAS funds and how debt is recovered. National Treasury has just opened up the country’s entire municipal budget dataset to public scrutiny and participation in line with South Africa’s international commitments to open data. The Department of Higher Education can and should become an innovator and open government data to democratic oversight.

The third step is for citizens to participate in setting the national budget. Should our universities cut their costs and, if so, should it be staffing costs? Should the higher education budget be increased and, if so, where should this money come from? Why does the government spend three times as much on the security cluster as on higher education?

The proposed student funding reforms can make higher education more equitable and sustainable. But this will only happen if NSFAS is subject to public scrutiny, participation and oversight.