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Sizwe Mpofu-Walsh: Free tuition is easily affordable

January 17, 2017

Both the state and universities are responsible for the dramatic increase in fees over the last decade, though each likes to blame the other. Between 2006 and 2012, the state’s contribution to the total funding of higher education remained roughly stag­nant, at about 40 per cent – yet between 2010 and 2012 tuition fees increased by 27 per cent, whereas student enrolment only increased by 7 per cent. Vice-chancellors suggested that this shift was because of a falling per-capita state subsidy, but this is inaccurate: the per-capita subsidy fell relative to fees precisely because fees were rising so quickly. Indeed, while the subsidy did fall in some years, in other years it actually increased. In effect, between 2006 and 2012 the state subsidy remained stable, while the contribution of fees to total university revenue increased, according to PWC. In years where the subsidy had increased (such as between 2010 and 2012) no concomitant fees relief took place. Since fees continued to rise at levels above inflation, the per-capita subsidy continued to fall in relative terms. A falling subsidy may have explained a portion of fees increases in some years, but it could not explain why fees had risen quite so dramatically at such a constant rate for so long.

Similarly, universities were unduly fiscally conservative. For instance, in the five years leading up to 2010, UCT had consistently overestimated the amount of revenue it would receive, to say nothing of a considerable budget surplus. This was for several reasons. First, the university relied on the myth that more students meant more costs, which was not necessarily true – since many university costs are fixed, more enrolments can often mean more revenue (as the fact that fees outpaced student enrolments has already suggested).

Second, the university’s ‘internal inflation’ models were biased: finance departments concocted a basket of goods that always defied infla­tionary gravity and justified lavish fees increases. When internal inflation figures were found to have been overly conservative, students did not get a break in the following year. Finance departments often relied on economic rhetoric as a smokescreen behind which they could justify fiscal conservatism.

For example, in 2015 the University of the Witwatersrand (Wits) argued that the falling exchange rate forced fee increases in 2015 because of dollar-pegged library expenditures. This argument is spurious: in the several years that the exchange rate strengthened or remained constant against the dollar fees still rose. It also neglects that the university had doubled its private donations in the previous year. Indeed, as reported by the 2014 annual report of the Wits Council, in 2014 Wits made a profit of about R40m from interest on net foreign exchange. Even if Wits lost all of its 2014 profits in 2015, this would have had a negligible impact on a budget in the order of billions.

Therefore, students took the fight to universities first, to foreground their complicity in the rising cost of education. Universities responded as they always had, by suggesting that the National Student Financial Aid Scheme (NSFAS) covered fees increases in any case. Until Fees Must Fall, this argument continued to convince university elites. But students responded that this problem simply kicked the can down the road through indebtedness, which rose by a staggering 31 per cent between 2010 and 2012. Students who did not graduate were doomed to a life of growing debt and unemployment – the system’s safety valve was itself faulty. The critique of governance more generally was clear: those in power, both state and university, were too prepared to transfer costs onto the most vulnerable in society.

When the state made its first concession, on 20 October 2015 – a cap on fees increases of 6 per cent – this was met with opposition from students. The problem was not simply that fees were outpacing inflation; it was that there were increases at all. But the picture was growing increasingly complex as the movement grew. A minority in the student movement was content with the cap. Others wanted no increase at all. Yet others demanded a firm commit­ment to free higher education. Still others wanted it implemented immediately. The debate soon shifted to the question of free education and its feasibility, and involved a more direct confrontation with the state.

‘Free education’ can mean different things. It could mean free tuition. Or, it could mean free tuition, accommodation, meals, books, study materials and a stipend for living expenses. It could also mean something between these options. The financial differences between the choices are significant. Fees Must Fall has not always been clear about the appropriate alternative. This is to be expected: it is not students’ jobs to envisage a new model, but that of publicly elected representatives and paid university administrators. In many ways, students have played their part in mobilising against the current model sufficiently to render it politically unfeasible.

The student criticism is also valid: at the very least, state-funded free tuition at universities is not only possible but actually rather inexpensive. Consider that the South African state already grants universities a subsidy of about R50 billion in 2012 prices. What would therefore be needed is an amount in addi­tion to the subsidy that would cover the revenue that universities receive in fees. How much is that? In 2012, the amount was about R15 billion. In the same year, South Africa’s budget was about R1trillion What would therefore be needed is the political will to find a proportion of 1.5 per cent of the current budget – which could be done by re-allocating funds from other parts of the budget, raising 1.5 per cent in additional tax or issuing a government bond. But this would be to fund free tuition for all. If we eliminated postgraduate fees from the equation, and also subtracted students in the top quintile of family incomes from the programme, it would drop to about R10 billion. A pilot project in the first year could focus on a full 10 per cent of needy students and would only cost government R1 billion. New models are possible, but they require the political bravery to try them.

This is in excerpt from a chapter in Fees Must Fall: Student Revolt, Decolonisation and Governance in South Africa published by Wits University Press in 2016.

Photo credit: Jaco Marais

24 Comments

  1. dr.zeek
    January 17, 2017 - 11:43 am

    What a simplistic approach to the problem. All we need to do is allocate money from other recipients in the Budget to higher education and THE PROBLEM IS SOLVED.
    REALLY? Is this the best a PhD Scholar at Oxford can come up with?
    Hey, hey, hey – let’s simply RAISE TAXES too.
    Perhaps, Mr. Mpofu-Walsh could indicate WHERE we should take funding from:
    1. A gogo’s pension?
    2. A person needing an urgent operation?
    3. Primary school funding?
    4. The SAPS?
    Good grief, no wonder RMF and FMF resort to violence if there thinking is so befuddled and short-sighted, while displaying a paucity of understanding of elementary economic issues.

    • Frans van Deventer
      January 17, 2017 - 12:08 pm

      Top notch Sir. I totally agree!

    • Nesta
      January 17, 2017 - 1:08 pm

      Exactly what I was thinking.
      That 1.5% has a tiny appearance until you put that money one side, the country is in such debt, that is only growing monthly.

    • marinus
      January 17, 2017 - 1:33 pm

      I cannot help wonder if the Phd Scholar is going to come back to RSA after his studies to work here and contribute to the taxes that he propses are used

      • Eduard
        January 17, 2017 - 2:13 pm

        Well, I sure hope he will! Seeing that it’s his great idea he should be here to test it out, you know.

  2. Marinus
    January 17, 2017 - 12:03 pm

    Hi,
    I have only one question, to which no-one seems to be able to provide an answer……..
    Why not free for all…… why exclude those students with higher income ? Is that not segregation
    Each and every student should be included in whatever is being called for (demanded)

    • Lerato
      January 17, 2017 - 2:52 pm

      The answer to your question is that fees are the most regressive meaning more is actually taken from those with the least. Hence a sliding scale would work better with extremes of those who can afford paying and those who can’t afford not paying. While “free tuition” does not exist, a semblance of it can only be implemented when there are no competing needs with minimum resources or if government deems education more important than other social spending.

  3. Jakker
    January 17, 2017 - 12:03 pm

    Just because something can be done does not means it should be done. Would it be wise to fund students’ studies if half of them don’t complete? Or are we working on the naive assumption that all the failing students are failing due to financial problems, and will pass when funded?

  4. Stephen Govender
    January 17, 2017 - 12:11 pm

    The R15 Bn revenue received from tuition fees is way too low. Universities rely on fees for in excess of 50% of their cost structure. The total government subsidy in 2015 was R28 Bn thus we should expect about R60 Bn to be needed to fully fund universities which is immense considering in 2016 Mr Gordhan couldn’t find an extra R2Bn. The idea that the fees increase above inflation isn’t wrong, think about the major cost in any institution which is labour. If fees don’t increase above inflation how does the university sustain wage increases above inflation? Also, UCT overestimating their receivable revenue is not fiscal conservatism it’s being overly optimistic and reckless, being conservative would be to estimate a loss when a surplus is realistic.
    You are implying there is widespread corruption in universities, yet why has their not been a forensic audit of the universities, if you say the finance department make convoluted estimates then reference them and show us don’t just throw things out there with no sources for readers to assess personally.
    My final point is that it is the responsibility of students to provide a funding model. We as students are not helpless individuals we are educated and innovative. We should solve this problem using our own intellectual abilities as a collective not leave it to corrupt and disinterested government officials who would rather the masses remained uneducated so they can claim more votes.

  5. Tshepo
    January 17, 2017 - 12:16 pm

    Let the born privilege respond this article, you will sense similarity in their opinions.

    • Buster
      January 17, 2017 - 5:10 pm

      please provide your test for “born privilege” (sic) so I may determine if I am part of “us” or “them” as surely “we” are in the same sinking ship

  6. Richard
    January 17, 2017 - 12:45 pm

    Has RMF and FMF not once considered that the root of our education issues is the lack of quality basic education? Without addressing this, all you are doing is building a castle on sand my friend. Should any funding not go into ensuring this is of a high quality for ALL learners? Furthermore I dont think you fully understand the impact of free education. Tell me where do you get free education in the world and then tell me how their tax base and rates compare.

  7. Frank
    January 17, 2017 - 2:25 pm

    It is easy to look at things in a vacuum and then suggest that that is the sole reason for increases. You bemoan above inflation increases, yet the two major expenses at universities (labour and electricity) are getting yearly above inflation increases. With the students burning down and looting buildings there is also a major increase in maintenance and replacement costs. Universities aren’t solely there for the education of the populace, infact they are places dedicated to the pursuit and dissemination of understanding. They main purpose of universities is to do research. Research costs money and most of the equipment being used in research is imported. Again the rand / dollar devaluation is more than inflation.
    I also love the fact that, for a PhD student, there are no sources given to your stated assumptions, neither do you feel the need for students to come up with alternatives for THEIR problem. A person that only complains without giving any solutions to the problem is just a complainer.
    Lastly, I’ve never in any of my years seen any university promise free education. I have seen a few political parties run their voting campaigns on this, yet none of their buildings are being burned down, nor are any of them being intimidated or being withheld from doing their daily jobs.

  8. Brennan
    January 17, 2017 - 3:26 pm

    The guy who wrote this just might be born privelaged.Did you consider that?

  9. Shabodien Roomanay
    January 17, 2017 - 3:29 pm

    If only there was less stealing/misappropriation, we may get to “free” education. We’ve spent over R2 trillion on education since 1994 and the result?

  10. jason mulryan
    January 17, 2017 - 3:29 pm

    Education should be free for all regardless of income, that would put everyone on a level playing field, and also help break barriers between races and class. Of course those with much less money could be given food and/or accommodation subsidies as well. One way to pay for it is to put anyone who attends a higher education course onto a higher tax rate for a lifetime (not a huge tax rate, maybe 0.5% higher), regardless of whether they only complete one year, six months or 3 years. The potential future tax income from the learner could also be traded as a derivative as potential future income for the government, thereby bringing in the money from two sources not one. Might work?

  11. skhumba
    January 17, 2017 - 3:51 pm

    if cuba can do it. why cant we do it. Political willpower

    • Jakker
      January 17, 2017 - 7:26 pm

      Maybe most of the Cubans received decent enough schooling to pass at university?

  12. Daryl
    January 17, 2017 - 4:21 pm

    Let him come and walk the talk see how he feels to have to pay extra tax then there is the health story still to come we are not bottomless pits with oodles of money. What about those that have their hand in the cookie jar.

  13. James
    January 17, 2017 - 4:34 pm

    “The student criticism is also valid: at the very least, state-funded free tuition at universities is not only possible but actually rather inexpensive…. How much is that? In 2012, the amount was about R15 billion…”.

    Hahaha, what’s an extra 15 Billion, no problem!

  14. Thabo
    January 17, 2017 - 4:35 pm

    His views are interesting because now with everything there is a cause and effect. You raise taxes you reducing the disposable income of individuals and which could have an impact on the missing middle we would want to help. Government bonds remember we want to keep the debt to GDP ratio within a reasonable band such would have a negative impact on the credit rating of government. If government issues those bonds for education how will they repay? Increase tax which will have impact on the middle class and poor or decrease spending to services which they so require both hurt the group which we trying to help.

    Remember government has priorities NHI which is a multi billion Rand project so we can’t take from health. For political reasons government would not touch the funds allocated to housing . Already we have massive funds for basic education which in a lot of schools is free but then look at the quality of that education right now.

  15. Buster
    January 17, 2017 - 5:45 pm

    I’m a tax payer and nobody has yet come to ask me how I feel about more freebees (be that gravy train perks, outright corruption, or free university). THERE IS NO SUCH THING AS FREE – I’m paying, over 50% of my income to taxes. Have the decency to come ask me for the other 50% before burning down what I have paid for and provided.
    The government is broke(n), under Min. Gordhan with Pres. Zuma “WE” added R1trillion to SA Government debt from 2009 to 2014 – he is no saint.
    Currently “WE” are just under R2Trillion (see national debt clocks org) and paying more than R100Billion in interest.
    Anything else on #FeesMustFall can’t be said any better than Touwsrivier Trucker Josh Drizzy Bergh’s Facebook video rant.

  16. Alisdair
    January 17, 2017 - 7:30 pm

    Aah so ‘Free Education’ means ‘free accommodation, free meals and a stipend for living expenses.’
    As an ex St John’s pupil and a beneficiary of a Rhodes Scholarship one would have hoped
    that those institutions would have assisted in mentoring students with a teensy weensy bit of foresight.
    Please think through the consequences of such an absurd postulation…..the (limited) queue…
    Do we have enough bricks in the country to build the living quarters….,enough chefs to prepare the food ….enough chicken franchises
    for the allowances?

  17. Some90
    January 17, 2017 - 8:31 pm

    Look at you fools attacking a hardworking, self investing kid trying to come up with solutions to a genuine problem. What’s your solution? I haven’t heard it anywhere. Always criticizing. Nonsense! I bet if you had a chance to be in Britain you’d jump at it and never come back as well, he’s been fighting Britain with its Rhodes statues and continues coming back here to solve our problems, he DEFINATELY will be testing it out. Stop being so negative. You’re not half the man, where are your solutions? Yappers!

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