Supplementary Budget 2020

R17bn over 3 years needed to fund higher education - Gordhan

Cape Town – An extra R17.6bn is needed over the medium-term to fund South Africa’s higher education system, Finance Minister Pravin Gordhan said on Wednesday in his medium-term budget policy statement (MTBPS). 

Government will draw down from the contingency reserve to make funds available from existing budgets. A portion of the resources to support university students will be found elsewhere from within the post-school education system.

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At a media briefing ahead of the delivery of the mini budget speech in parliament, Gordhan said government heard the concerns raised by the “post-school community”. 

South African universities have come to a standstill over the past couple of weeks, as students have violently protested against fee increases. 

READ: No fees to cost fiscus R250bn over three years

“We’ve heard about the hardships the poor face, the uncertainty about entrance into institutions, and the worries about upfront registration fees and debt management. We hear you. We hear you clearly. 

“But we’re also saying: there’s no room for violence. It doesn’t help this process. What we require now is for all sorts of initiatives from diverse sectors of society to bring solutions to the table.

According to Gordhan, National Treasury has received “well thought through” technical proposals about a future funding model for universities. 

“There have been five proposals on the fiscal side – some from academics, some from students and the private sector. And all these people realise the state has limited resources. But how can we compliment the limited resources? We’re looking at how we can combine the technical proposals in an atmosphere where we can find a shared solution,” Gordhan said.  

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The movement of university students demanding that “fees must fall” has placed the issue of education funding at the centre of the policy debate, Gordhan said. 

But two concerns lie at the heart of the issue. First, despite massive increases in allocations to the Nsfas, the enrollment of academically deserving students from poor communities has grown faster than available funding. Second, there is no clear national framework for financing students who – although not affluent – are above the modest threshold established by the NSFAS means test. As a result, many students face financial hardships that undermine their ability to succeed academically.

Gordhan said South Africans need to take cognisance of the fact that allocations to post-school education and training will be the fastest growing element of the national budget in February next year. 

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University subsidies will grow at an annual average rate of 10.9% over the next three years, while allocations to the National Student Financial Aid Scheme (Nsfas) will be increased at 18.5% providing support to under-funded university students.

In the 2016 Budget, R5.6bn was added to university subsidies to fund the zero per cent fee increase for the 2016 academic year, Gordhan said. In the same budget Nsfas received additional funding of R10.6bn over the 2016 medium-term expenditure framework period. 

Of this amount, R2.5bn was allocated in the current year for short-term debt relief for 71 753 unfunded or inadequately funded students who were at universities in the 2013, 2014 and 2015 academic years. 

READ: No to free education but tuition fees could be funded - economist

The remaining R8bn was for unfunded new and continuing students for the 2016 academic year and beyond.

In the 2017 medium-expenditure framework, government will fund the increase in fees at higher learning institutions for the 2017 academic year, up to a maximum of 8% for students from households earning up to R600 000 per year, Gordhan said, while top-ups will also be made to the Nsfas.

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