Fees Commission’s ICL proposal not the solution
President Zuma’s appointment of the Heher Commission in 2016 was a classic example of “kicking for touch”, while student riots were ongoing. It bought him time. But that time is now over with no real solutions on the table.
The DA has called for a debate on a matter of national importance on the funding of Higher Education. The debate should consider funding both in the short term – in time for 2018 to start smoothly – and in the long term. Universities have been unable to set fee increases and students are anxious without a clear policy announcement. The situation is ripe for new upheavals.
The Fees Commission Report is a thoughtful document, but is mainly a summary of findings from various submissions, with a set of “nice to have” recommendations. It is not a costed and implementable policy.
There are several points of agreement between the DA’s own submission to the Commission and the recommendations of the Commission, including:
- Protecting students against rampant fee increases and improving the quality of education by increasing state subsidies to Universities and TVETs;
- Continuing to collect fees from students who can afford them;
- Supporting third stream income as a source of finance;
- Stabilising the number of students at universities to permit stabilisation of funding; and
- Ensuring that no poor student who receives government funding gets loans worth less than their full cost of study and other student expenses.
However, when it comes to the core reason for the existence of the Commission – to examine whether fee free Higher Education is feasible or desirable and to offer solutions - the Income Contingent Loan (ICL) proposal offered by Judge Heher is not helpful.
ICLs would be provided by banks and underwritten by government. Students would receive loans which would be paid back through the SARS system once graduates have become employed and reached a set income threshold. Government would buy out the loans after a period.
The Commission also proposes penalising students who repay their loans faster than anticipated, or opt out of taking a loan, with an ‘equalisation fee’ – essentially punishing students who wish to contribute to the stability of the system.
The ICL proposal seemingly has little support from students, banks or civil society and would therefore be hard to implement. There is no clarity as to where the Government backing would come from. Translating it into policy would take a long time. Since NSFAS loans are already provided to hundreds of thousands of students, it seems strange to create an entirely new, expensive and potentially cumbersome system – especially when the Commission also recommends that NSFAS loans could be retained for TVET college students.
A further concern is the suggestion that unclaimed pension benefits and Unemployment Insurance Fund (UIF) surplus funds be used to finance the various funding needs of higher education. Given the tendency of the current government to loot the public purse, granting access to these funds contains the risk of opening them up to appropriation for other expenses, like bailing out SAA.
The DA stands by the three-tiered model for funding that we proposed to the Heher Commission. Our model is designed to keep the system stable, and at the same time to ensure that “missing middle” students are not left behind, while poor students are covered financially.
Under our model, the poorest students would receive loans, convertible to grants upon success, which would cover all their costs. Students in middle-level income bands would qualify for a smaller portion of support, graded depending on their family income. Students who are able to pay their own fees would be required to do so – and certainly not be penalized for doing so.
The Commission appears to have fallen for the idea that a single, simple policy change – the introduction of Income Contingent Loans - would be the solution to an enormously complex set of problems. We favour a much more pragmatic approach which will not entail the destruction of existing institutions such as NSFAS (although we do propose a serious re-vamp), the abandonment of the new experimental loan scheme already being piloted by NSFAS, or jettisoning the enormous amount that has been learnt about student funding systems over the years.
The ANC government must now confirm whether the recommendations in the report will form part of policy or not. It needs to put an end to rumours that it, too, is enamoured with simplistic solutions and would rather pursue a bizarre proposal to fund higher education by increasing VAT and slashing social grants, bankrupting the Treasury and even undermining the Constitution.
We look forward to continuing this debate in Parliament.
Statement issued by Belinda Bozzoli MP, DA Shadow Minister of Higher Education & Training, 17 November 2017