The government has finally added meat to its commitment to providing fully-subsidised education for the poor and working class by allocating funding, but the question of sustainability remains unanswered with uncertainty about how exactly higher education will be funded after 2020.
Delivering the much-anticipated budget speech on Wednesday, Finance Minister Malusi Gigaba said treasury had earmarked R57-billion to fund free higher education over the next three years for students who come from households with a combined annual income under R350 000. This is on top of R10-billion that was provisionally allocated in the 2017 budget.
Free tertiary education will be phased in over the next few years until it covers all years of study, starting with deserving first-year students in 2018. Allocations for fully subsidised higher education amount to R12.4-billion in 2018, R20.3-billion in 2019 and R24.3-billion in 2020.
In this period, qualifying university and Technical and Vocational Education and Training college students will have the full cost of studying covered, which includes tuition, study materials, accommodation, pocket money and/or transport. This would be administered through the National Student Financial Aid Scheme.
Although analysts and student activists agree that this is a milestone achievement by the government, they’ve also raised concerns about what will happen after 2021.
“Government has not communicated how financial sustainability [of the free education policy] will be achieved. So it remains an open-ended question now and I don’t know how they are going to make that happen,” said Khaya Sithole, accountant and founder of the Lesedi Education Endowment Fund.
Sithole said the government’s decision to increase Value Added Tax (VAT) was an acknowledgement of the fact that every other avenue to raise money had been exhausted and there was no capacity to raise money elsewhere.
Gigaba had the tough task of announcing new tax measures, which would raise an additional R36-billion in 2018/19. The bulk of which, R22.9-billion, coming from a higher VAT rate, which moved for the first time since the dawn of democracy, from 14% to 15%. Despite cuts to government expenditure, tax adjustments, and a crackdown on corruption and mismanagement at state-owned entities government is still faced with a R48-billion revenue shortfall.
Fees-must-fall activist Fasiha Hassan echoed Sithole’s sentiments saying government’s financial commitment was a victory but it’s also just the “first step” towards making free higher education sustainable in the long run.
“Does that mean we have to put forward a graduate tax? I am not advocating for this, but it is a discussion that can be had on how we make it sustainable. Do we say corporates have to play a bigger role?
“I think the work is actually only beginning in many ways. We need to now sit down with the policymakers and economists and work out how we are going to make it work post three years from now,” said Hassan.
Returning students in their second, third or fourth year of study who currently have NSFAS loans will have their loans converted to bursaries from 2018 onwards. This is under the same conditions that were originally signed for when the funding was granted using the former household income threshold of R122 000.
However, there are some student’s who are considered deserving under these new changes that have been left out of the budget allocations. Hassan said there’s a need to be pragmatic about how free education will be implemented in a manner that it “trickles down to the student on the ground”.
“In as much as they have allocated R57-billion, which is an incredible thing, what hasn’t been addressed properly enough is the issue of historic debt. Even if they are going to fund 2018 what kind of plan are they putting in place for students who were studying in 2016, 2017 and have historic debt.”
At the same time, not much has been said about what is going to happen to returning students who qualify for NFSAS under the revised R350 000 threshold and were not eligible for funding before the changes were announced.
The budget statement merely says that policy decisions concerning historic debt, adjustment of the family income threshold as well as interventions to decrease dropout rates and the construction of student housing will be taken in due course.
When that happens, these decisions could “raise the cost of the programme significantly”.
Gigaba said it was a great achievement for the country and would assist in “breaking the cycle of poverty and confronting youth unemployment, as labour statistics show that unemployment is lowest for tertiary graduates”.
“The struggle for higher education is over for the next three years and even though we haven’t achieved universal free higher education what the government has been able to do is far greater than what they had done before fees must fall,” said Sithole.
Tebogo Tshwane is an Adamela Trust trainee financial reporter at the Mail & Guardian