Break the mould of how we educate and who pays
Much of the public debate over the financing of tertiary education revolves around identifying the sources of funds for “free” college and university attendance. The debate assumes that taxpayers ought to fund students’ acquisition of qualifications.
This assumption must be challenged. The question is not if society can make free tertiary education available, but whether it should. The answer is arguably no, because qualifications are incomeproducing assets for graduates.
Most students attend university to obtain qualifications that will allow them to earn a greater lifetime income than had they not attended. Generally, the economic benefits to graduates are relatively high.
Taxpayers typically should not finance such incomeproducing assets for individuals. If people invest in a house in order to rent it to others, taxpayers do not finance the purchase price. To do otherwise would magnify inequality.
Taxpayer funds should be made available to finance social justice objectives that are not income-producing, such as social grants, basic healthcare, access to justice for the poor, school transport in rural areas, defence and foreign relations.
Every rand devoted to “free” university education is one less that can be devoted to vital public social justice expenditures. If society uses tax income to fund “free” university education, the poor are condemned to greater, continued poverty because there will be fewer resources to meet their needs.
The argument that “free” tertiary education is a social justice measure is false under a properly capitalised National Student Financial Aid Scheme (NSFAS) that makes long-term, full-cost loans available on a means-tested basis to all academically qualified students.
The efficient repayment of loans will make the system significantly self-funding.
Under a full-cost loans scheme, there would be no “missing middle” or disadvantaged students from poor families because it will break any link between access to tertiary education and family income. This link, especially in the past, has been responsible for the injustices in financing tertiary education qualifications.
A loans scheme provides that all people eligible to attend university should have access to loans that will meet all their costs. These include living expenses, transport, clothing, books and the income sacrificed when a student from a poverty-stricken family undertakes a university course.
Many students can’t afford to pay fees and other costs up front because, under current arrangements, many cannot borrow the full costs. Loans may be offered by financial institutions but the state will need to be a major player through providing a capital base of a reformed NSFAS.
It is also essential that the South African Revenue Service is given the statutory responsibility for managing the student loan repayment system. A properly enforced repayment system will, among other things, encourage potential students to think carefully about the value of their proposed courses of study.
A feature of the debate over “free” fees and associated issues is the almost complete absence of any serious analysis of the relationship between fee levels and the costs of running the university and college system.
There seem to be some sacred cows in the debate, including the apparent acceptance that the university system of 2017 will physically, organisationally and pedagogically be maintained in most essential respects for the next 50 years or so.
There should be a national inquiry into the costs of tertiary education to establish if they can be significantly reduced. Such an inquiry would tackle a fundamental question: is the traditional “bricks and mortar” system the most cost-effective means of providing many programmes? For example, electrical engineering qualifications might require relatively expensive onsite laboratories; providing courses in postmodern discourse studies does not.
Should each university offer subjects in, say, economics, when relatively cheap access can be had to economics courses offered online by world-class universities and other providers?
Costly duplication of enrolment processes can also be managed by a centralised, electronic admissions system for the whole country.
The government should amend the Higher Education and Training Act to create rules that will allow students to design their own degrees based, for example, on Moocs (massive open online courses) from high-class universities. Study and assessment for such degrees can be conducted online. The costs would be small compared with existing arrangements. And it would add badly needed competition to tertiary education in SA.
Other options include organisations providing specialist qualifications inhouse. The Council on Higher Education and the South African Qualifications Authority are surely capable of the imaginative thinking needed to design and implement such innovation. Universities ought no longer to be the exclusive providers of qualifications.
A high priority should be placed on expanding the use of the recognition of prior learning. A system of challenge examinations could be designed and any person who wishes to obtain formal certified recognition of say, strategic management, could register and pay a small fee to a university allowing them to sit for examinations in strategic management.
To discuss fees in the absence of analysing the determinants of fee levels is to examine only part of the matter.
The claim is sometimes made that higher education qualifications are “public goods” and, as such, must be funded by taxpayers. This is a serious misunderstanding of the concept of a public good. But even if qualifications were public goods, there is no logical necessity that taxpayers must fund them. Another argument is that the community benefits because students have qualifications. Even if this were true, taxpayer subsidies would fall far short of providing “free” higher education. But this claim is not true. Just because a person creates, say, a beautiful garden and the enjoyment is widely shared, does not sustain an argument that the owner of the garden should have it subsidised by taxpayers.
The loans scheme allows us to finance higher education qualifications and social justice expenditure. Students can draw on future increased earnings to finance university costs while taxpayer funds are preserved for the poor and unemployed who have no chance of having a better life unless the betteroff, and those who will become better off, share their resources with them.