1. IMPROVING ACCESS TO HIGHER EDUCATION IN SOUTH AFRICA UNDER A DEMOCRATIC DISPENSATION Prof Isaac Ntshoe, PhD College of Human Sciences, University of South Africa, PO Box 392, Pretoria, 0003 Tel: +27 012 429 4096 Fax: + 27 012 429 4000 e-mail: ntshoim@unisa.ac.za

2. INTRODUCTION Second-stream income including student loans, scholarships and bursaries to improve access and completion Why funding higher education through second-stream income Institutions are forced to introduce cost-recovering and cost-sharing funding 2

3. VARIOUS FORMS OF COST-RECOVERY AND COST-SHARING Tuition fees, student loans and other cost-recovery and cost-sharing mechanisms involving (Privatisation element) Student loans Scholarships and bursaries 3

4. ISSUES Private social costs and benefits of higher education Increased private contribution to higher education and enhance efficiency Debt accumulation arising from non-payment of tuition fees and its effects on efficiency National Student Financial Aid Schemes, improving access enhance equity and redress 4

5. ASSUMPTIONS UNDERPINNING COST- SHARING AND COST-RECOVERY Beneficiaries should contribute towards the costs of higher education Returns for studying (their families and society also benefit through “spill over's” or “neighbourhood effects) Cost sharing and cost recovery through student loans can promote efficiency because of the social and private returns of higher education Partnership funding encourages students to complete their studies on time 5

6. Assumptions underpinning continued …… Widening of access itself improves equity and redress, and completion rate Cost recovery and cost-sharing tend to recreate and reinforce rather than reduce inequities The poor are denied access, because of poor access to earlier education opportunities are social attributes Student loans as a cost-sharing mechanism (problems of non-repayment, and the length of time taken by individual students to pay back the loan) 6

7. COST-RECOVERY AND COST-SHARING IN SOUTH AFRICA Cost-sharing and private contribution to higher ---- post-apartheid South Africa Universities charged tuition fees during apartheid era Careers in police, teaching and nursing received generous indirect government subsidisation through bursaries. Tuition fees increased despite a threefold increase in the funding allocation for higher education between 1986 and 1994; the budget was increased from R1 161 billion in 1986 to R3 227 billion in 1994 Student debt has accumulated significantly, sometimes eclipsing the increase in government’s increased allocations in the new dispensation Student debt has naturally been more acute in historically disadvantaged institutions than in historically advantaged institutions. 7

8. YearStudent debtStudent debt written off Student debt as percentage of tuition fees Student debt written off as percentage of tuition fees 2000-35 464 000-2.4% 2001404 910 19236 560 00022.9%2.1% 2002542 358 00043 963 00025.8%2.1% 2003644 415 71258 445 00025.6%2.3% TABLE 1 The size of the accumulated student debt at six historically advantaged universities in South Africa 8

9. The size of accumulated student debt of six historically disadvantaged universities in The size of accumulated student debt of six historically disadvantaged universities in: 2000-53 924 000-18.6% 2002148 242 00059 885 00045.3%21.9% 2003430 100 00043 639 000115.0%11.7% 2004462 678 00097 048 306100.7%21.1% Student debt increased from R404.9 million in 2001 to more than R644.4 million in 2003 Similarly, the debt written off by these institutions far exceeded the debt written off by historically advantaged institutions, and increased from R53.9 million in 2000 to R97.0 million in 2003 9

10. NSFAS accounts for 0.7% of this total The money comes from the following sources: 10

11. In 1996, a total of 73 140 NSFAS awards were made, amounting to R333 million, and by 2006 NSFAS expenditure had increased to R1 382 million 124 730 awards were made and the bulk going to black students The scheme has become a key aspect of transformation, with the scheme’s disbursements having grown to R1, 5 billion in 2008 Graduates benefited from the scheme contributing to the fund in repayment The Scheme generally favours black students 11

12. YearAfricanColouredIndianWhiteUnknownTOTAL 199537 280 85%2.367 5%1 362 3%196 0%2 664 6%43 869 100% 199863 8000 4%2 063 3%1 144 2%1 563 2%7 197 9%75 767 1000 200120 335 22%524 1%365 0%397 0%71 916 7%93 537 100% TABLE 2 The number of National Student Financial Aid Scheme awards by race, 1995, 1998–2001 12

13. TABLE 3 Recovered money Amounts recovered during the past 8 yearsAmounts made available from the pool of recovered funds YearsRecovered moniesYearsRecovered monies 1998/1999R30.3m1998/1999R14.2m 1999/2000R66.4m1999/2000R175m 2000/2001R90.8m2000/2001R175m 2001/2002R110.9m2001/2002R150m 2002/2003R147.2m2002/2003R211m 2003/2004R208.5m2003/2004R211m 2004/2005R243.82004/2005R280m 2005/2006R304.8m2005/2006R305m The non-payment of tuition fees and the failure to repay loans therefore undermine the principle of cost recovery, and thus work against the government’s intention of making the sector more efficient. 13

14. COST-RECOVERY AND COST-SHARING IN BOTSWANA All students at the University of Botswana received bursaries, but in return undertook to work in Botswana after graduating, and to make repayments in the form of 5% of their annual gross salary for five years. The Department of Student Placement and Welfare has developed logistics and strategies to get the recovery process off the ground, The DSPW has also developed recovery schedules to guide the recovery process. 14

15. The process of allocating bursaries and recovery process: Beneficiaries begin the process of repaying their loans. Beneficiaries to repay the loan portion of their scholarships on completion of their study programmes 15

16. IMPLICATIONS FOR POLICY AND PRACTICE First, the rhetoric of free higher education is no longer sustainable Governments can no longer to be e sole source of funding for public higher Cost sharing and cost recovery in higher education has been the rule rather than the exception in developing countries Demands and challenges of increasing participation rates, massification and increasing competition between public and private funding A created space for private contribution towards funding higher education through private–public partnership funding Conversion of loans to bursaries efficiency and equity 16

17. Implications continued… Tuition fees and loans do tend to recreate past inequities, since students from poor family backgrounds, who are generally black, are often unable to pay tuition fees. The problem of unwillingness to pay tuition fees in South Africa NSFAS allocations and the subsequent conversion of these loans to bursaries is skewed in favour of black students Conversion of loans to bursaries has improved not only access, but also throughput rate, as students have an incentive to complete their courses. All potential beneficiaries are awarded scholarships until they have completed their studies, after which they are employed and expected to repay their loans. 17

18. Implications continued… The complementarity between the public and private good of higher education should inform funding policies Proposed funding polices should also take into account the indivisibility of social and private returns Students from certain sectors of the black community will continue to be excluded from higher education Despite problems of repayment rate and defaults, when compared with tuition fees, student loans appear to be a better option as a means of recovering the costs of higher education 18

19. Implication continued… NSFAS has been used to reduce the percentage of written-off student debts accumulated from the non-payment of fees, especially by black students in South Africa. NSFAS should be tempered with imperatives of equity by allocating loans in favour of previously disadvantaged and designated groups Student debt can cancelled out efficiency in cost recovery and cost sharing Legal and other administrative framework for monitoring of the repayment of loans when students have completed their studies and the value of repaid loans remains the main limitation of this particular cost-recovery and cost- sharing system. 19