Matthew Lester: Student loan ‘financial suicide’. Where’s govt’s 20c:R1 tax spend going?

The fact that Wits University students are protesting because of an increase in fees is besides the point, according to Matthew Lester. A less than 10 percent increase will go neither here nor there in solving the country’s access to education problem. In the piece below Lester questions government’s education spending, and why so few of its citizens are able to attend university, given 20 cents of every R1 in tax collected goes to education. It’s also an area mostly kept to the rich, or those lucky enough to get a government grant. And in a previous article written by Lester he spoke out against student loans, and reiterates it below: calling it ‘financial suicide’. There is no definite answer to the problems of tertiary education in South Africa but Lester throws up a few options. – Stuart Lowman

by Matthew Lester

How can it be that with South Africa spending more than 20 cents of every Rand in tax collected yet we have very few students that can afford to enroll at our universities?

Those students that make it to university either come from wealthy families or get a government grant. The rest either don’t go or land up with mountainous student loans or families committing financial suicide in trying to settle the bill.

This problem has been compounding for years and it has now reached breaking point. ‘Tweaking’ the system by keeping next years increase below 10% will have as much effect as throwing a muffin into space.

University, government and family funding is now exhausted. So there is no option but to call on business to invest in the future of our students.

Read also: Matthew Lester: Education lost between HR & CSI – key to addressing inequality

Scholarship funding, usually an unconditional grant, often doesn’t help. Those who qualify for scholarship funding are generally the students with magnificent track records. These students can generally get there anyway.

Bursary funding (a scholarship with strings attached) are a different. Students are usually required to work for an employer on a year for year basis post graduation. I could be wrong, but I think bursary funding is drying up.  Why?

SA has to have another look at the SETA system. Employers currently pay 1% of payroll into the fund. That’s R15 billion per annum. So employers sit back thinking they have done their bit for skills development.

20% of the skills development levies (R3bn per annum) get transferred into the National Skills Fund. That helps in getting the poorest to university. But then the remaining R12 billion gets deployed to more than 20 SETA’s to be spent on mandatory and discretionary funding and, of course, administration expenses. The effect of this is very hard to track.

Read also: Cees Bruggemans: SA not getting investment returns for education money

Using the business community and the SETA funds we should be offering a simple package to employers who grant bursaries to students at universities

 - The bursary should be part of the skills development component of the B-BBEE scorecard. Actually, it already is.

 - Bursary expenditure should qualify for an enhanced tax allowance of (say) 150%.

 - The employer should be able to reclaim a component of the bursary from the relevant SETA without going through all the hassle of registering a Pivotal Skills Program.

If we could implement something along the lines above I think we might be able to do a lot better in sorting the problem out. And quite quickly. Because actually the SETA programme is already directed by the Department of Higher Education.

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