Higher Education: Public or private good?

Belinda Bozzoli says fully funding the universities is a recipe for state control over them

Do we believe that the point of Higher Education is to give certain people a personal advantage in society by educating them to the point where they become knowledgeable, skilled and cultured global citizens as well as to climb the heights of the middle and upper middle classes? Or do we hold that it is there to make sure our society is equipped to survive and thrive in the 21st Century, by providing us with the skilled people we need to innovate and the professionals we need to run things?

This question is easily answered in the case of basic education – schooling is widely acknowledged as unequivocally a public good. Most contemporary societies consider it their duty to make it available to all. But Higher Education is always treated ambiguously. “Why should we pay for these pampered, privileged students”, say those on the one side, especially when it comes to those studying degrees not perceived to be ‘useful”; “they are lucky to be there”. Some even argue that we should make the whole system private.

On the other hand, we hear of how crucial university graduates are to the well-being of society itself. You cannot manage an economy in this day and age without the requisite innovators, engineers, architects, planners, doctors, accountants and the like, they say.  You cannot live in the modern world without the richness of understanding and insight offered to us by artists, historians, musicians, social scientists and writers. The kinds of qualities produced by Universities are not simply personal luxuries but to the benefit of society. 

Our debates about University funding are caught up in these ambiguities. If higher education is a “private good” designed to assist the individual to advance, then the state should have little to do with funding it. In fact, widespread privatization of Higher Education would seem to be the logical outcome of such thinking. This is what has happened in many parts of Africa. In some countries, private universities far outnumber public ones, and do a better job than they do in some respects.

But if higher education is a public good which will benefit all, including even those who do not attain University qualifications, then the state should fund it entirely. While the welfare states of Europe fund higher education generously many are beginning to include fees in their funding models, and most run enormous fund-raising and grant-obtaining operations as well. China and Cuba have unambiguously stuck to the public funding model.

But in fact neither of these options is entirely satisfactory. If there is no significant state funding in the University sector, the tendency will be for Higher Education to become extremely expensive and attract only the tiniest elite; and for it, in most (but not all) cases to become powerfully instrumental in what it chooses to teach – the most profitable courses being first on the menu. Only the wealthiest of private Universities – the Harvards of the world - are able to avoid these dangers.

Conversely if Universities are entirely state funded, especially in developing countries lacking in a robust University tradition, as in the Chinese and Cuban examples, they tend to become instruments of state policy and producers of mere skills. It becomes almost impossible for them to develop or retain any semblance of autonomy, or for them to attain the richness of offerings that we would considerable characteristic of a true University. In the more statist systems, for example, history and sociology are considered to be too threatening to the social order to cultivate as independent spheres of thought. 

The public/private goods dichotomy is a serious matter to economists. Very few of them would place Higher Education firmly in the “public good” category. The benefits to the individual are too considerable, especially in a society such as ours, where only 5% of the population ever gets to University.

The Finance and Fiscal Commission, whose job it is to advise Treasury on expenditure priorities, has stated numerous times that it regards Higher Education to be neither solely one nor the other, but a combination of the two. Thus has arisen the model of “shared funding” used by the South African state to support Universities – the state and the student should both contribute to the costs of running them.

And over time something of a social contract has emerged to underpin the approach. The state’s contribution had settled, by the 1990s, at about 50% of the total costs of running the system; while student fees had settled at around 20%, with a growing proportion of these fees being supported through grants to students via the NSFAS system. (the balance is attributable to grants, contracts and donations)

Today we see that this social contract has been broken.  The state’s contribution to the overall costs has fallen by an enormous amount, and it now contributes only 40%. The proportion contributed by fees, on the other hand, has risen from 20% to 30%. (the remaining portion comes from grants, donations and the like). This has put unbearable pressure upon the private individual, just at a time when the economy has stagnated. It is no wonder that social protest has erupted as a result.

In calling for there to be no fees at all, however, the protesters have moved firmly into the camp that Higher Education should be considered purely as a public good. But the risks of this are immense. Estimates are that fully free Universities will cost the taxpayer an additional R60bn a year just to start with.

The taxpayer might well rebel at the enormous burden this will place upon her, as it is clear that the graduate gains personally from University education. Furthermore, if we move to a full “public good” model in South Africa, where University autonomy is already shaky, the state’s capacity to control our Universities will be given an enormous boost. 

It would be wise to stick to the “shared” funding model. Increasing the state’s contribution to reach the original 50% level, ensuring that fees are not subject to ratcheting increases, and revamping NSFAS to ensure that a wider range and number of students is supported are all feasible options.

Belinda Bozzoli is DA Shadow Minister for Higher Education and Training.