The Student Funding Crisis In South Africa


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The current violent student protests at the University of the Witwatersrand (Wits) have once again placed the student funding crisis in South Africa in the spotlight.


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On Saturday, 4 March 2023, the Wits student representative council promised to make the university ungovernable if their demands are not addressed. These demands include allowing students with outstanding fees to register, and issues surrounding accommodation, specifically the capping of the accommodation allowances by the National Student Financial Aid Scheme (NSFAS). This capping of accommodation allowances by NSFAS to R45 000 per annum led to a  demand by students that Wits absorb the R86 million accommodation budget shortfall. 

This follows similar disruptions in February at Sol Plaatje University in Kimberly related to student accommodation placements and food. The University management came to an agreement with student leaders and the protests were suspended. The University of Cape Town (UCT) also experienced student protests in February as a result of the “student accommodations crisis, fee blocks, financial exclusion and National Student Financial Aid Scheme (NSFAS) allowances”. There were also protests at the University of Johannesburg related to water issues and NSFAS allowances.

The last few weeks’ protests ominously brings back memories of the #FeesMustFall student-led protests that began in October 2015 in South Africa and continued into 2016, causing hundreds of millions of damages at South African university campuses and leading to a severe trust deficit between students, university leadership and the government. This led to the announcement by former President Jacob Zuma on 16 December 2017, ahead of the start of the ANC’s 54th national conference, that government would provide free higher education in 2018 for the first year students from the poor and working class with a combined household income of R350 000 per year.

The Missing Middle

The announcement by Zuma in 2017 created a new class of student which would become known as the missing middle. They are students who are too poor to afford higher education, yet not poor enough to qualify for funding through the NSFAS, the Government funded scheme that supports students with a household income of up to R350 000 per annum. These missing middle students typically fall into an annual household income bracket of greater than R350 000 but less than R600 000 and is widely considered as falling into a funding gap where they cannot afford to pay for university studies themselves, but they also do not qualify for “free” education through the NSFAS mechanism.

The Historical Debt Problem

Many students are excluded from registering at universities to continue their studies due to outstanding debt from prior years. By the end of 2021 the total historical debt at public universities in South Africa had skyrocketed to R16.5 billion. University sustainability is at the very heart of this problem. Universities use the only leverage they have to collect that outstanding debt – withholding results or qualifications and blocking those with high amounts of outstanding debt from re-registering without making payment. Students, on the other hand, demand that universities allow them to re-register. This is further compounded by the fact that students have extended their study periods way beyond the minimum period required to complete the specific qualification, often with huge amounts of outstanding debts.

Unemployment

South Africa is suffering rising levels of youth unemployment. In Stats SA’s December 2022 Quarterly Labour Force Survey (Quarter 4: 2022) released on 28 February 2023, it reported that South Africa boasts 10.2 million young people aged 15 - 24 years, of which 33.6% were not in employment, education, or training (NEET). This is 0.8% higher than the NEET rate in Q4: 2021. If one expands the age bracket to young persons aged 15 - 34 years, a staggering 43.4% of those youths are NEET, with female youths being the worst affected at a heart-breaking 46.7%.

With overall unemployment for Q4: 2022 at 32.7%, only 2.7% of the unemployed population of 7.8 million persons were graduates, there is a clear need to create more graduates who are work-place ready, can advance in the job market and contribute economically.

This is leaving many young and ambitious young South Africans in a desperate situation where they have dreams and aspirations to improve their qualifications and future prospects through higher education, but they have simply nowhere to turn to for funding, and unable to fund this from their family or own resources. The uncertainty and changing goal posts also makes for a very stressful experience during a time that should be filled with excitement of beginning this new journey of self-improvement. Is it a dream denied, a promise broken?  Is the dream of fee free education still alive, and is the promise made by then President Zuma being honoured? 

Possible Solutions

One can never condone the violent protests, but it is certainly understandable that young South Africans are standing up to fight for their future.  

One thing that is sure – in times of high levels of public and private sector corruption, and a declining economy, resources are awfully scarce and there needs to be a clear focus on “value for money” when it comes to spend and investment on higher education. There are many aspects to this, but in an environment of scarcity one wants to direct resources to where it will be making the biggest impact and yield the best results.

Firstly: so much money gets wasted by students spending more time than necessary to complete their degrees. It is not just about funding; it is about providing a support ecosystem that will ensure that students succeed in record time.

Secondly: we need to focus on scarce skills. Skills that will result in gainful employment, or even better, result in entrepreneurs that create jobs, at the end of the study period. Skills that will make a real impact on the economic success of South Africa in future.

Thirdly: those that can afford to pay for their own studies must do so. There has to be a means test associated to all bursaries and funding provided to students, in addition to the normal academic and other qualifying and selection criteria. In an environment of immense scarcity, we simply cannot have a situation where a student from a wealthy family, because of excellent academic performance, gets a scholarship to study, at the expense of a poor or missing middle student.

Lastly: universities need to cut out the fat and restrict fee increases. Just this year we once again saw university fee increases of 5.1% for tuition and a 7.1% increase for accommodation. These levels of annual increases are simply not sustainable for students and funders alike.

Student Loans (With Wrap-Around Support) As A Solution

In the second half of 2022 Ikusasa Student Financial Aid Programme (ISFAP) partnered with one of South Africa’s premier commercial banks to launch a student loan model, backed up by ISFAP’s leading wraparound support. Although ISFAP will continue to support students through full-cost bursaries, a loans model was introduced in line with the original blueprint to be able to support more students, as the need from missing middle students remains substantial and still largely unserved. 

The ISFAP Loans Model is set up in a way that donors who may want to stretch their contribution to help more students can donate to the loans model. The donation received by ISFAP is split between a pure grant portion and the balance of the funds is invested into a collateral investment account. The grant portion is used to pay for the wrap-around support of the student and a monthly stipend. The balance of the funds is used to provide a guarantee to the bank for the loans they grant to the students. The loan is awarded to the missing-middle student without the normal requirement of parents or other family members to grant collateral to the bank as the collateral is provided by ISFAP from the aforementioned portion of the donation. Loans are granted to the students on favourable terms and the student is only expected to start repaying once they start working. 

This is a huge step forward in increasing the scalability of support to missing middle students who wish to study at university but do not meet qualifying criteria for funding; are unable to obtain bursaries and scholarships and experience household funding limitations due to affordability. This will multiply the number of students who are able to be supported to complete their degrees successfully.

Conclusion

In conclusion, solving the higher education funding crisis in South Africa is everybody’s business. We cannot afford another #FeesMustFall with its devastating impact on infrastructure and diminishing levels of trust. We need to initiate dialogue amongst stakeholders that will endeavour to find long lasting and sustainable solutions to the challenges.

Who is ISFAP?

In 2016, and in response to the #feesmustfall movement and the resultant cry for free education, the Minister of Higher Education and Training established a Ministerial Task Team to investigate alternative operating and funding models within the higher education sector. The Task Team’s work culminated in the formation of the Ikusasa Student Financial Aid Programme (ISFAP), a programme that would mobilise both private and public sector funds to support missing middle students with their dream of becoming graduates.

A pilot was launched in 2017 with 691 first-year students, five universities and 14 critical skills qualifications. The main aim of the programme was not only to support students from the missing middle financially (tuition, accommodation, transport, meals, books, laptop, and cash allowance), but also to provide a support structure that would enable these students to complete their studies successfully, thereby reducing drop-out rates. This support offered by ISFAP, generally referred to as “wrap-around support”, includes life skills, mentoring, medical and psychosocial support, additional academic support, and social support.

To date, ISFAP has secured over R1.5 billion towards the programme and funded over 3 000 students across 11 public universities in South Africa. These students are studying degrees that will ultimately lead to filling South Africa’s critical shortage of medical doctors, nurses, pharmacists, engineers, actuaries, chartered accountants, occupational therapists, physiotherapists, prosthetists, computer network engineers and data scientists, scientists and other 4th industrial revolution related careers.

As funding expands, the list of qualifications and partner universities ISFAP caters for will also be expanded based on funders’ requirements, provided that they align to ISFAP’s strategic intent of securing the future of South African youth and ensuring their meaningful participation in the growth of South African economy.

YOU Can Be Part Of The Solution

To support the country’s missing middle, ISFAP raises funds primarily from corporate and government entities as part of their Corporate Social Investment (CSI) programmes, Black Economic Empowerment (BBBEE) initiatives and tax planning efforts. In 2019, the ISFAP Foundation NPC was registered, with registration as a Public Benefit Organisation in terms of the Income Tax Act flowing shortly thereafter. This means that donations made to the Foundation are tax deductible by the donors (S18A) and exempt from donations tax.

ISFAP also engaged with the Department of Trade and Industry to gazette the Broad-Based Black Economic Empowerment (B-BBEE) Code 300 that was recommended by the Ministerial Task Team. Final gazetting of Code 300 was done in November 2019. These revised B-BBEE codes mean that corporates are allowed to receive 4 points on an attributable spend of 2.5% of their leviable payroll spend if they contribute to bursaries for black students at all Higher Education Institutions.

The COVID-19 pandemic has, like most other areas of the economy, also impacted ISFAP’s funding, and for 2021 - 2022 a smaller intake of bursary students was funded due to the reduction in funding received. Hopefully, this is only temporary and ISFAP will continue to grow in years to come to support the growing need of the over 250 000 youths who are estimated to form the missing middle.

ISFAP is constantly looking to partner with new funders, corporates, foundations and charities, the government sector, international donor agencies and other philanthropic bodies to increase funding to be able to support more students. To become part of the solution to tackle the missing middle pandemic, please contact ISFAP.

Written by Morné du Toit, Chief Executive Officer, The Ikusasa Student Financial Aid Programme Foundation NPC (ISFAP)

 

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ISFAP students

ISFAP is a bursary scheme which targets the missing middle in universities. Keep reading to find out which courses and universities this bursary funds. 






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