Depriving future students from a livelihood

FREE TUITION: After a meeting in Jameson Hall, protesting students went around UCT campus mobilising other students en route to the Bremner Building where a memorandum was handed to Vice-Chancellor Max Price. Picture: David Ritchie/ANA

Since 2015, the tensions in the Higher Education sector have escalated beyond boiling point with the now famous or infamous “Fees must fall” movement, depending on one’s vantage point. An important intervention by the National Government of appointing a Commission of enquiry has only but quelled the tempers for a short while, but the volcano is still bubbling below the surface, and your guess is as good as mine that an eruption is inevitable, especially once the much-awaited report is released.

But all of these happening, offer a rare opportunity for innovative thinking towards addressing the very fundamentals that led to the age-old tensions in the first place. Student debt and rising costs of higher education are a global phenomenon. The model of funding for our Higher Education institutions in nowhere near sufficient for the kind of output expected, compounded further when one considers research outputs that have to compete with other well-resourced institutions the world over.

Managing finances in Institutions of Higher Education requires a new approach and partnerships of trust between all role players. We have seen a widening gap between the Private and Public Sectors over time and Institutions of Higher learning remain a necessary bridge between these sectors, especially as the graduates serve both sectors. It therefore goes without say that positive partnerships developed to resolve the issue of student debt could become a model for the country at large. Institutions have been forced into a corner to even adopt tough measures of “blacklisting” thousands of errant students, all in an endeavour to encourage some sense of responsibility regarding their outstanding or unpaid fees.

This action, however warranted has deleterious outcomes as it disadvantages the very young graduate’s chances of crafting careers or even being considered for scarce jobs in this economic environment. It is a fact that Universities are owed billions of rand in unpaid fees which they badly need to function effectively.

Not all poor students get financial help, but they manage to secure registration money and hope for the best. Some students on the other hand, secure sponsorship and if they fail they forfeit the contract, which means that they have to pay off the fees themselves. For those students who don’t pay up, their diplomas or degrees might be withheld until their debt is settled, often putting them in a catch 22 situation.

The debt owed to Institutions of Higher Learning needs to be evaluated and characterised properly as some of the debt is historical and goes back as far as the 1980s. Even more, the disparity between Institutions also is of a historical nature, with the scale tilted on the side of Institutions with a majority Black African student population.

The debt mountain takes a heavy toll on institutions as the fees are quite significant in the budgeting cycle of every institution. Unpaid student debt thus impacts negatively on operations and the problem is growing annually and not dissipating, especially in respect of the ‘low fee increase scenario’ that was part of the negotiated settlement while the Commission was in force. With all factors considered, it is therefore becoming increasingly difficult to efficiently and effectively run Institutions of Higher Learning.

The main drive should not only focus on collection of outstanding fees, but also extend further to building life-long relationships with former student/alumni to ensure a system of support and stability of the Universities going forward and providing the much-needed support for Institutional programs in South Africa.

What has been recorded in the media regarding the problems in the sector have painted a grim picture regarding struggling Universities. More than R24bn is owed to the National Student Financial Aid Scheme (NSFAS) by past and current students. According to the NSFAS annual report for 2015-16, the entity recorded a loan book with a cumulative nominal value of R24.2bn and a fair value of R7.2bn. During this same period, the entity had to impair an amount of R22m that was owed by institutions. The report stated that this money had been outstanding for more than three years with a slim probability of recovery.

The University of KwaZulu-Natal has a total of student debt which runs into the millions and students who owe the institution money are not allowed to register for further study until they settle their debts. Some institutions such as the University of Venda have carried the burden of student debt for decades. The institution still has debt of more than a R 100 million, some dating back to 1982. And the problem is not unique to the University of Venda, many of their alumni owed fees to the university. Even though the debt went back many years, the institution did not write off student debt and held on to student records.

The University of Limpopo is similarly struggling. The institution had a student debt of more than R 81.9m. Unisa has 83 905 students dating back to the 2011 academic year in debt to the university. The overdue balances are carried over a period of two years from the last academic year of registration.

At Wits the procedure is if a student does not “voluntarily” discuss ways of repayment, the institution contacts the student or the person responsible for payment to develop a “repayment schedule. Only if this process is not successful will the university embark on implementing the formal debt collection process. Wits was one of the more “fortunate” institutions as it had the “lowest burden of debt”. The university continues to collect any shortfall throughout the year and does not permit a student to escalate their debt through a further year of registration. At the University of Cape Town the situation is similar. Although they have a small percentage of outstanding.

Great efforts by the Department of Higher Education and Training, in addition to the National Student Financial Aid Scheme (NSFAS) allocations to universities need to be applauded. The department made an additional allocation in loans for graduates with outstanding fees who met the scheme’s criteria. The aim of this special funding was, first, to assist unemployed graduates get their certificates, thereby improving their chances of getting employment, and, second, to improve the cash flow of Institution by settling eligible students’ outstanding debts.

Also, institutions such as the Walter Sisulu University have used the helping hand and “longstanding debt has been taken care of in various ways”. The department made “special provision” for final-year students so that they could successfully “exit the system”.

The Department of Higher Education is embarking on the PPP between donors for funding, the students and private sector businesses to build a model for the “poor” and “missing middle students”. This aims to bring into play R70 billion worth of donor funding on a model that will allow students to study and start re-paying a low interest percentage loan only when the earn R250,000 per year.

Funding the “poor” and “missing middle class” students is not the only answer, students who are able to pay for their studies must be reminded and persuaded with a bit of pressure to make amends and repay their study loans.

Amidst great efforts by the department of Higher Education and Training, FET Colleges, Tertiary Institutions and loan/donor funders to develop policies to administer and manage the awarding of loans to deserving students from poor families, less has been done in developing policies equally meant to administer and manage the systematic repayment of debt by students who have dropped out of higher learning institutions, exited through successful acquisitions of their qualifications (graduated) and those who stood surety for recipient of loans. 

The reasons why institutions haven’t successfully developed policies to systematically recover debt from itinerants are attributed to the following reasons but not limited to, (1) Institutions are burdened by their core administrative obligations, (2) Lack of institutional knowledge on management of itinerants, (3) Lack of technological infrastructure and human capacity and (4) The (political incorrectness) of swimming against the tide of “fees must fall” campaigns.

This therefore calls for the need of institute of higher learning such as NSFAS to rethink its current strategies. 

Mr Baker MJ Maseko is the Chairman of New Integrated Credit Solutions (Pty) Ltd.