President announces fee-free undergraduate education

Defying the advice of the commission he appointed to look into the issue of fee-free higher education, South African President Jacob Zuma on Saturday 16 December announced in a statement that the African National Congress-led government would introduce fully subsidised free higher education for poor undergraduate students from 2018.

The statement was released on Saturday at the start of the African National Congress’s 54th elective conference held in Johannesburg, where ANC President Jacob Zuma’s successor will be elected. The timing of the release, after months of silence, drew criticism from the opposition which described it as an example of “populist politicking”.

In a short statement also released on Saturday, the National Treasury said the proposal would be considered by the Ministers' Committee on the Budget and the Presidential Fiscal Committee. “Any amendments to existing spending and tax proposals will be announced at the time of the 2018 Budget," it said.

The move to fee-free higher education goes against the findings of the Heher Commission of inquiry into free higher education and training, headed by retired judge Jonathan Heher, that free higher education would put too much strain on the national budget, which already faces a revenue shortfall of R50.8 billion (US$4 billion).

Subsidy increase to 1% of GDP

However, in line with another of the commission’s recommendations, Zuma announced the government will increase subsidies to universities from 0.68% to 1% of gross domestic product or GDP over the next five years. This increase would align South Africa’s higher education allocation with those of comparable economies.

The increase was aimed at addressing the “overall gross underfunding of the sector”, Zuma said, and would help to “kick-start a skills revolution towards and in pursuit of the radical socio-economic transformation programme”.

As a result of the subsidy increase, there would be no tuition fee increment for students from households earning up to R600,000 a year during the 2018 academic year, he said.

The new plan amends the “outdated” definition of poor and working-class students as those coming from households with a combined annual income of up to R350,000.

The president also said that all poor students enrolled at public technical and vocational education and training, or TVET, colleges would be funded through grants not loans.

“NSFAS [National Student Financial Aid Scheme] packages already allocated to existing NSFAS students in their further years of study will be converted from loans to 100% grants, effective immediately,” he said.

In another divergence from the Heher Commission which recommended that the existing NSFAS model be replaced by a new income-contingent loan system, Zuma announced on Saturday that all grants for students at universities and TVET colleges would continue to be managed and administered by NSFAS.

In terms of the income-contingent loan system, students would repay their loans only after graduating and upon reaching a specified level of income. If students fail to reach the required income threshold after graduating in order to repay the loan, the government would bear the secondary liability of the loan.

Phased-in approach

Zuma said the new model would be phased in gradually “year on year in a fiscally sustainable way”.

The announcement by the president comes months after the handing over of the Heher Commission report to Zuma at the end of August and ends ongoing speculation and lack of clarity over the way in which fees would be handled in the 2018 academic year, due to start next month.

On Thursday last week, and in the absence of guidance from government, Universities South Africa or USAf – the umbrella body for the country’s 26 public universities – announced that the majority of their members had determined that the inflationary-linked increase for 2018 would be set at 8%.

In a statement, USAf said universities could not “wait perpetually” for the outcomes of the deliberations of the inter-ministerial committee appointed by the president following the Heher Commission report’s release.

According to USAf, discussions had been held with the Department of Higher Education and Training and with Minister Hlengiwe Mkhize, and USAf was awaiting a statement from the minister confirming the 8% increase.

Party policy

Defending the provision of free higher education for poor students on the basis of ANC policy and past conference resolutions, Zuma said, a “hierarchical and autonomous character as well as an alienating institutional culture prevalent at our institutions of higher learning continue to be a direct barrier to the country’s transformative agenda”.

DA Shadow Secretary for Higher Education Professor Belinda Bozzoli said while the announcement of fully subsidised free higher education and training for poor and working-class undergraduate students was welcomed, it was “completely uncosted and therefore must be seen for what it is, playing politics with the hopes and futures of millions of young people”.

She also questioned the capacity of NSFAS to effect the new plan.

“NSFAS will require a massive expansion to provide funding grants to students from families earning less than R350,000. Major administrative problems have hampered NSFAS this year, with some applicants waiting months for a response.

“The president proposes that all NSFAS loans be converted to grants, thus rejecting entirely all the work that has been done by Heher, NSFAS and others, into various sorts of loan schemes which would provide the fiscus with some return on its outlay. The scheme will clearly need vastly improved systems to handle the expanded volume of applications,” she said in a statement.

Commenting on the new plan, USAf CEO Ahmed Bawa was reported to have said that it puts “pressure on universities”.

“Our universities are already functioning at the edge of capacity, there’s no possibility without major investment in infrastructure for an expansion of the system,” he told EWN.

This story updates an earlier story headlined 'Universities body announces tuition fee increase'.