Means-tested grants, not free education, a sensible way to go
THE ORGANISATION for Economic Co-operation and Development said last week that a system of income-contingent and means-tested grants was still the most scalable approach to university finance, not free university education.
Andreas Schleicher, the director of the directorate for education and skills at the OECD, said: “Interestingly, OECD data shows absolutely no cross-country relationship between the level of tuition fees that countries charge and the participation of disadvantaged youth in tertiary education.
“In fact, social mobility is worse in Germany, which pays for almost all university education through the public purse, than it is in the UK. That is because to mobilise those public funds, Germany ends up charging tuition for children in kindergarten, which leads to a much less level playing field from the start,” Schleicher said.
The Heher Commission, appointed by President Jacob Zuma last year, has also recommended the income-contingent loans (ICLs) as a way to fund higher education.
Under the proposal, ICLs would be provided by banks and underwritten by the government. Students would receive loans which would be paid back through the SA Revenue Service system once graduates have become employed and reached a set income threshold. The government would buy out the loans after a period.
The commission further suggested that unclaimed pension benefits and Unemployment Insurance Fund surplus funds be used to finance the various funding needs of higher education. However, reports have been rife that Zuma will ignore the commission’s recommendations and announce free university education soon.
Phephelaphi Dube, the director at the Centre for Constitutional Rights, said it was concerning that the Presidency has not already committed to implementing the commission’s recommendations.
“News reports mentioned that the Presidency, through the Presidential Fiscal Committee (PFC), has taken control of the National Treasury’s budget process in order to eventually announce an R40 billion free tuition plan.
News reports say the PFC has taken control of the Treasury’s budget process.
“This would mean that the president may reject the recommendations of the Fees Commission Report and instead advance the plans of the PFC,” Dube said.
The funding of free education has reportedly caused ructions in the National Treasury, which culminated in the resignation of the head of the budget office, Michael Sachs, last week. His resignation was reportedly due to the Presidency’s alleged interference in the budget process. However, the National Treasury has denied such allegations.
Tanya Cohen, the chief executive of Business Unity South Africa, said the funding of higher education required a careful balance between ensuring access to higher education with sustainable fiscal management.