Funding can be found to implement free-education plan
President Jacob Zuma’s unheralded announcement of a no-fee solution for universities called forth cynical responses on all sides. It is a classic populist move, promising patronage to swing blocs irrespective of cost or sustainability.
The Treasury seems more interested in keeping its control over the budget than helping poor students get to university. And Zuma’s critics have piled in, exaggerating the cost while ignoring the injustice of the current system.
Populism emerges where the powerful ignore the real problems of the majority of voters. It relies on magical solutions and payouts to supporters, and usually ends in tears. But it shouldn’t become an excuse to wish away the social challenges at its roots. The brouhaha over university fees illustrates the problem. Prohibitive fees have real consequences for poor households. By making it even harder for poor students to graduate, they block social mobility, making SA’s profound inequalities even more intolerable for most voters.
It’s hard to overstate how much a degree counts in today’s economy. In 2015, the median income for people with a degree was R17,000 a month, compared with R3,000 for those without a degree. The unemployment rate was 6% for graduates, compared with 27% for other adults.
We should oversell the benefits of expanding university access, which will only help a small share of young people.
In upper middle income countries, only a quarter of workers have degrees. In SA, the figure is about a sixth, so even expanding to international norms won’t help that many people. Besides, only about 17% of SA’s school leavers qualify for university — and they are disproportionately from highincome households.
Fees for education in aggregate have almost doubled in real terms since 1994. For tertiary education, from 2008 (the earliest available data) to 2015, fees rose 25% above headline inflation. After 2015, the freeze on fees saw a modest decline in real terms.
All households face the same fees, whatever their income. But the burden varies by class. Four years of education at R100,000 takes 2.5 years of income for households earning R40,000 a year. It is under two months’ income for the richest 5%.
The main cost driver has been falling state spending per student. Total student numbers climbed from 370,000 in 1997 to almost 1-million in 2014, but state spending per student dropped by about a third in constant rand.
Increasingly, state funding went to the student loan fund. As a result, universities hiked fees, student debt burdens soared and high fee levels mean many qualifying poor students don’t even apply to study.
We hear a lot about how the cost of free tuition for lowincome students is not affordable. Let’s be clear: R12bn is a lot of money, but it’s only about 1% of the national budget and 0.3% of GDP.
If it’s a priority — and surely ensuring social mobility and justice is a priority — the funds can be found without big cuts to other programmes.
The easiest and fairest solution would be an income tax surcharge of 1.8%. The burden would fall primarily on the very well-off, most of whom are former graduates. In financial terms, the result would be almost the same as the loan fund: graduates would still end up paying, but based on their actual earned incomes rather than a statistical prediction of prosperity that doesn’t always pan out.
Free university for poor and middle-class households would not dent poverty and unemployment for most young people. That, too, is a populist illusion. But it would strengthen the national skills base, increase social mobility and end an obvious injustice.
Makgetla is a senior researcher with Trade & Industrial Policy Strategies.