Catch-22 for varsities: Hike fees or

Another fees freeze is untenable and solutions such as a graduate tax should be considered

The student protests that brought university campuses to a standstill in late 2015 and early this year have given way in recent months, although punctuated by sporadic incidents of unrest, to a period of quietude. This is not surprising as the students won their demand for a freeze on fee increases in an easy victory — it was conceded to within the space of a week, with no attempt on the part of the state to initiate a process of engagement on the possibilities and pitfalls of the demand for free higher education. It was done to buy peace without any consideration of the long-term implications for the sustainability and quality of higher education.

The president, instead of providing leadership, established a commission of inquiry into the feasibility of free higher education — a sure sign that the issues raised by the students are not being taken seriously.

This is indicated by the fact that the commission, which was established in January, is required to complete its work within eight months and to submit its final report two months later — that is, in November, by which time the fees horse for 2017 would have long bolted. Moreover, the commission seems to be operating far from the public eye.

The state scrambled together the bulk of the funds needed to compensate universities for the shortfall in revenue from the freeze on fees — R1.9-billion of the R2.2-billion needed. This has also been provided in the medium-term expenditure framework to cover 2017 and 2018. The universities funded the remaining R300-million from reserves and by cutting back expenditure. But it is unlikely that the universities will be in a position to continue to contribute their share of the shortfall in 2017 and 2018 without compromis- ing their core teaching and research activities.

So, what happens in the next few years? This is pertinent as the discussions on institutional budgets and fee increases for 2017 will begin in earnest after the midyear recess. The state and universities are apparently working on the assumption of a fee increase of 6% to 7% in 2017 based on the consumer price index, yet the CPI is not an adequate measure of the costs of higher education. Academic books and laboratory equipment are in the main imported, thus significantly increasing costs, given the weakening rand. In addition, the cost of insourcing nonacademic services, which has been agreed to in principle, is estimated by Universities South Africa to be between R400-million and R2-billion.

It seems clear that the medium-tolong-term sustainability of the universities is under threat unless there is a substantial increase in baseline funding. This is unlikely, given the parlous state of the economy, which is facing stagnation, as indicated by the Reserve Bank projection of zeropercent growth in the near future. In fact, the state subsidy for higher education has been declining in real terms over the past 15 years. It is because of this and because CPI is not an adequate measure of higher education costs that fee increases have been higher than the CPI.

According to the Council on Higher Education (CHE), between 2008 and 2013 the state subsidy as a proportion of institutional income has remained at 40% and the proportion from student fees has increased from 28% to 33%.

The latter is a direct consequence of a stagnant and declining state contribution in real terms against the backdrop of ever-rising student numbers, which puts pressure on institutional budgets and compromises the quality of teaching and learning in terms of infrastructure — lecture theatres, library holdings, laboratory equipment and residences and, more importantly, staffing. This is evident from the fact that, although student enrolments grew by 34% in this period, permanent academic staff only increased by 22%, leading to an increase in the staff:student ratio from 1:24 to 1:27. The universities are left with Hobson’s choice — either increase student fees or do nothing, which would lead to the slow but sure decline in the quality of provision.

There is clearly a recognition by the powers that be that a further freeze on fees is unsustainable, hence the assumption of an inflation-based fee increase for 2017. But it cannot be assumed that the return of the students to the classroom means that free higher education is off the agenda or that students would be willing to countenance fee increases either next year or in the future.

The students have been emboldened by their victory and their expectations for fee-free higher education have been raised. Moreover, in the current economic climate, the squeeze on household budgets would make it difficult to meet increases over and above the 2015 fee baseline, because windfall funds from the freeze on fees would have been used to cover other expenses. In fact, it is precisely the impact of this squeeze on households that helps explain the widespread public support for the