Students must assume some responsibility for university tuition fees, a Stellenbosch professor says

Professor Stan du Plessis, Chief Operating Officer and Economics Professor at Stellenbosch University, has labelled the National Student Financial Aid Scheme (NSFAS) as “poorly designed and badly implemented.”

He added, “While we have free reserves as part of our endowment that aren’t restricted by funders, this doesn’t put us in a strong position. For instance, Stellenbosch has a reserve that covers only 2.4 years of expenses, which is considerably less than what is typical for many international universities.”

When he mentioned that some universities in America operate with zero reserves—meaning they had functioned without meaningful income for 22 years, the audience murmured. 

“However,” Professor Du Plessis noted after a short pause, “on a positive note, we [at Stellenbosch University] don’t carry much debt because we are not allowed to borrow money. While we maintain a high reserve which is part of our endowment, this still doesn’t equate to true financial sustainability. Our operating margin is tight at 70%, as we do not budget for surpluses. We are running a very tight ship.”

NSFAS was overhauled from a loan scheme and re-launched as a total bursary in 2017 after the #Fees Must Fall demonstrations that destabilised university campuses across South Africa from 2015. This was after the SA government had appointed the Heher Commission to investigate the feasibility of free higher education. Despite the Commission’s recommendations that free higher education was not feasible, the government implemented this change, months into the Commission’s mandate. “The scheme now costs the government R51 billion annually while funding for universities declines year after year,” the senior economist said. 

He stated that despite good intentions, the system fails to address students’ financial burdens, especially considering the rising costs of higher education. He said the current NSFAS design does not keep up with inflation, leaving many students without adequate support. Professor Du Plessis noted this has led to R8billion in student debt, mostly from housing expenses.

One of the major criticisms levelled at the NSFAS system is its model of providing free education without expecting students to contribute financially, despite the significant private benefit they receive from higher education. From an economist’s perspective, Professor Du Plessis argued, “It is reasonable to expect students to shoulder some of the costs of their education, as they benefit both personally and financially from their degrees.”

He acknowledged that South Africa should have a financial aid system for underprivileged students. “However, we must address the economic reality that makes such a scheme more urgent.” The senior economist emphasised that the current NSFAS system is a non-viable solution to a very real problem.

He outlined several reasons for its non-viability, including its poor design. “Higher education yields a higher return,” especially in South Africa, he reminded the audience. He argued that if individuals benefit significantly, “it is only logical that they should shoulder some of the burden.” From an ethical standpoint, he added, “It is reasonable to expect some obligations, especially in a country where most taxpayers, who foot this bill, did not have the opportunity of higher education.”

He pointed out that higher education spending is only part of the social budget and contributes to income inequality in the country. While targeted grants and childcare funds aim to promote equity, higher education spending disproportionately benefits a portion of the population. “When you spend on higher education, it ends up benefiting a small segment of the population more than the rest,” Du Plessis explained. “This results in a growing disparity in income distribution.”

He reflected on the changes over the past 30 years, noting that “government funding used to account for more than 90% of our income.” Traditionally, he said universities had three streams of income: government subsidies that included research funding; student fees and private funding. As the landscape shifts, universities are increasingly leaning on student fees, prompting the question of the sustainability of escalating student fees.

Yet universities cannot rely on student fees income alone. Professor Du Plessis stated that “Forbes regards student fee income as a significant vulnerability.” At Harvard, student fee income makes up less than 5% of the overall funding, while at Stellenbosch University, it comprises 25% of its income. He highlighted that “for the first time in our history, student fees will represent a larger portion of our budget than government funding.”

Professor Du Plessis mentioned that South African universities face additional risks compared to American institutions due to a stagnant economy, which disproportionately impacts poorer households and the very students who are most desperate for opportunities in higher education. Du Plessis commented that “support for this sector is as precarious as their situation.” 

In South Africa, university fees are regulated by a policy framework aimed at making education affordable for all families. This framework is based on various legislative pieces including the CET Colleges Act, the Public Finance Management Act, and the National Credit Act.

He said the threat of fee regulation looms large in a climate where “government subsidies have been declining…If we cannot control student numbers and the subsidies attached to them, our financial independence is jeopardised.” 

Not that raising fees in this climate of escalating living costs would help. That would lead to what Prof Du Plessis called “institutional suicide,” considering that lately “education has become more expensive than medical expenses.”

He further lamented “the cost of higher education now higher than the average income,” placing a burden on poor households – where the students needing higher education the most, come from. In conclusion, he said universities urgently need to reconsider their pricing structures to keep education both accessible and sustainable.

Despite this doom and gloom, Professor Du Plessis remained optimistic, believing that universities can still take action to secure their future.

Cautioning against preoccupation with global rankings, he argued that the true value of South African universities lies in their impact on society.

“Universities must set their own agenda in the context where they can make a difference,” he said, adding that institutions with large endowments, such as those in the United States with up to $54-billion in donations may dominate rankings but face entirely different challenges than local universities. “What matters is the impact we make in our contexts,” he added.

Using Arizona State University as an example, Professor Du Plessis praised its use of technology to educate more students without increasing staff. “While other sectors celebrate rising productivity, higher education is one of the few where efficiency is penalised,” he noted, again stressing how rankings can discourage innovation.

Beyond challenging the ranking system, the senior economist suggested rethinking financial aid. “We can design financial aid to prevent it from becoming a debt burden while ensuring students contribute to the resources used for their education,” he said. He also encouraged improving throughput rates by introducing modular and hybrid learning models to reduce costs.

Finally, Professor Du Plessis stressed that universities could use their resources more effectively without sacrificing academic freedom. “Our greatest assets are our academics, campuses, and academic content. We can use these creatively and efficiently to ensure a better future.”

Yolanda Lemmer is a contract writer for Universities South Africa.