STAN DU PLESSIS AND WIM DE VILLIERS: Minister’s fee freeze would worsen crisis in education system

Higher education & training minister Nobuhle Nkabane wrote to the vice-chancellors of all public universities in SA on December 6. Her message was alarming: universities are requested to freeze their fees and operate with the same student fees next year as in 2024. 

This extraordinary request uses the mechanism of the “social compact” on fees, a one-sided annual announcement used by the minister over the past 10 years to try to regulate fees implicitly.

Outright fee regulation would be contrary to the Higher Education Act, which unambiguously assigns responsibility for fees to the council of each university, and therefore illegal.

This is not by accident; the institutional independence of our universities depends on their ability to take responsibility for their futures, including their finances.

The revenue of public universities comprises government subsidies, student fees and the so-called third income stream. The latter is a catch-all term that includes research contracts, philanthropic donations and commercial income.

For most SA universities the last two components of the third income stream are small compared to the size of their integrated budgets. Research income may be significant at some of the more research-intensive universities, and is extremely important to build research capacity and produce the scholarly impact of these universities. Nevertheless, the research contract portfolio almost always yields a small financial loss for such universities and is therefore not a mechanism to ensure the financial sustainability of a university.

The government subsidy is determined by the department of higher education & training in the context of the government’s own fiscal difficulties. In recent years the annual increment in this subsidy has fallen behind inflation, and in 2024 declined in absolute terms.

This leaves student fees as the only revenue instrument to ensure the financial independence of our universities. A multi-year enrolment cap regulates student numbers, so universities can only adjust their revenue projections of a planning horizon through annual fee adjustments approved by each university council.

Since the #FeesMustFall protests a decade ago, the government has attempted to ensure financial access for relatively poor SA students through the National Student Financial Aid Scheme (NSFAS). This scheme is a poorly designed attempt to implement fee-free education, despite the Heher commission’s warning in 2017 that such a scheme would not be financially sustainable.

The Heher commission was correct. It is an elementary fiscal fact that the SA government lacks the resources to provide fee-free higher education to a significant proportion of the population. Despite the ever-larger budgets allocated to NSFAS and the following attempts to keep it sustainable, implicit fee-regulation implied by the so-called “social compact”; the government's failure to adjust the eligibility criteria for inflation for almost a decade by now; and capping residence and food allowances, which leave students of a fee-free bursary both hungry and debt-laden, the NSFAS scheme is still unsustainable.

Now the minister has decided to save NSFAS by telling universities to freeze fees. When then-president Jacob Zuma overstepped his authority with an illegal fee freeze in 2016, the  Treasury was tasked to partially compensate universities with a higher subsidy to compensate for the loss of fee income. In 2024 the minister offers no compensation.

Financially ruinous

If she succeeds, the cost of the latest NSFAS bailout will be financially ruinous to universities. We will then add bankrupt universities to the unsustainable NSFAS scheme, and the public higher education system will descend into crisis.

Nothing is inevitable about this crisis, and the alternative starts with acknowledging that the current NSFAS scheme is unsustainable and cannot be fixed. The Heher commission was right that such a scheme would not be sustainable, and it was right that fee-free higher education is not desirable either. University councils should be empowered to ensure the long-term financial sustainability of these high-impact institutions, with the scope to implement their financial plans.

To address the real concern for the financial inclusion of all South Africans we need to return to the wisdom of the Heher commission and design a bursary scheme that reflects a fair and sustainable balance of responsibility between the taxpayer on the one hand and the primary beneficiary of the education — the student — on the other.

• Du Plessis is COO, and De Villiers rector and vice-chancellor, at Stellenbosch University. They write in their personal capacities.