Towards a fair fees system

The Conversation Africa’s Andile Makholwa spoke to Nicholas Barr, professor of public economics at the London School of Economics & Political Science, about the best ways to fund university education

What is the best form of funding university education for a developing country with high inequality levels such as SA? “Free” is just another word for “some other sucker pays”. The more unequal a country, the more likely it is that university students are from better-off families. Financing higher education from taxation means poorer people are paying for richer people to get degrees that will help to keep them richer and thus perpetuate inequalities.

In a good system, university is free for students while they are studying but they then pay part of the cost of their higher education once they have graduated. Thus, a good system would have tuition fees, but these would be initially paid for the student by the student loans administration. Students would repay part of the cost once they started earning.

What is needed is a good system of student loans, where “good” means a loan designed so as not to deter people from poor backgrounds from going to university.

This matters for two strategic reasons. Technological advance continues to drive up the demand for skills; thus a large, highquality university system (alongside its other purposes) is necessary for economic growth.

Also, expansion of higher education is central to increasing social mobility. By assisting expansion, a good system of fees and loans does not pull up the drawbridge — it widens the staircase. Which countries have successfully implemented systems where students don’t pay fees when they go to university? How have those systems worked? There are two approaches. Some countries have no tuition fees. In Scandinavia this