Education and Training 12 August 2016 Prof Dan Kgwadi (Vice - - PowerPoint PPT Presentation

Presentation to Commission

• f Inquiry into Higher

Education and Training 12 August 2016

Prof Dan Kgwadi (Vice Chancellor) Elmarie de Beer (Executive Director Finance and Facilities) Anneke Moolman (Senior Lecturer) Lerike Jacobs (Senior Lecturer)

Agenda

Introduction to NWU 1. NWU within the Higher Education Sector 2. Impact of subsidy and tuition fees on NWU Towards a sustainable National Student Loan regulatory framework – NWU view 1. The Importance of Higher Education and Training 2. The Viability of Fee Free Higher Education in SA 3. Government Objectives vs Issues of HEIs 4. HEI Funding 5. Suggested Student Fee Regulatory Framework 6. Closing Suggestions 7. Limitations

NWU within the Higher Education Sector

9999 North-West University Contact Distance

Teaching/Learning

Performance Indicators Production 4 / 8 2013 2014 2015 2016* 2013 2014 2015 2016* Headcount Enrolments 36195 37193 37943 39855 24780 25942 26127 32937 FTEs/Headcount Enrolments: UG to HONS 87.3% 87.2% 84.7% 87.2% 46.6% 47.0% 48.4% 80.0% FTE/Headcount Enrolments: M&D 39.1% 38.3% 38.0% 39.1% 48.6% 41.6% 45.7% 40.0% Grad Qual Duration Rate: UG to HONS 1.37 1.32 1.30 2.09 2.75 2.72 2.46 2.57 Grad Qual Duration Rate: M&D 2.62 2.71 2.50 3.40 2.15 2.44 1.69 M&D Heads/Total Heads 11.0% 11.3% 11.6% 10.7% 0.3% 0.2% 0.2% 0.2% *Provisional; not final 9999 North-West University Total

2013 2014 2015 2016* Headcount Enrolments 60975 63135 64070 72792 FTEs/Headcount Enrolments: UG to HONS 69.5% 69.5% 68.8% 83.7% FTE/Headcount Enrolments: M&D 39.3% 38.3% 38.1% 39.1% Grad Qual Duration Rate: UG to HONS 1.96 1.90 1.79 2.49 Grad Qual Duration Rate: M&D 2.61 2.71 2.50 3.40 M&D Heads/Total Heads 6.6% 6.7% 7.0% 5.9% FTE Enrolments/Perm Acad Staff 31.9 31.6 29.5 40.7

Performance Indicators Production 5 / 8

Research

9999 North-West University 2013 2014 2015* 2016* Masters Graduates 781 746 742 8 Research Masters Graduates 506 506 521 8 Doctoral Graduates 168 171 222 7 Publication Output Units 1169.5 1127.5 1273.1 Publication Output Units/Perm Acad Staff 0.91 0.84 0.88 Weighted Research Output Units 1170 1127 1273 NRF Rated Staff/Perm Acad Staff 13.1% 12.9% 13.1% *Provisional; not final

Staff

Performance Indicators Production 6 / 8 9999 North-West University 2013 2014 2015 2016* Permanent Staff 3477.0 3686.0 3876.0 3873.0 Permanent Academic Staff 1288.0 1342.0 1445.0 1446.0 Permanent Support Staff 2189.0 2344.0 2431.0 2427.0 Perm Acad Staff/Total Perm Staff 37.0% 36.4% 37.3% 37.3% Perm Acad Staff with M-degree/Total Perm Acad Staff 30.5% 29.6% 30.0% 29.0% Perm Acad Staff with D-degree/Total Perm Acad Staff 49.7% 52.2% 50.5% 50.2% Avg Age of Perm Acad Staff 43.4 43.4 43.0 43.3 Avg Period of Service of Perm Acad Staff 9.4 9.3 9.2 9.7 Female Perm Acad Staff/Total Perm Acad Staff 45.7% 46.9% 47.6% 48.2%

Black* Perm Acad Staff/Total Perm Acad Staff 27.5% 28.3% 30.9% 32.0% Black* includes all race categories except White *Provisional; not final

200 400 600 800 1000 1200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015[i]

Total Research Output

Article equivalents Conference proceedings Books

200 400 600 800 1000 1200 1400 1600 1800 UKZN UP UCT SU WITS UNISA NWU UJ UFS UWC RU NMMU UFH UL TUT UV DUT CPUT UZ VUT CUT WSU MUT

2014 Publication output

ISI 2014

0% 2% 4% 6% 8% 10% 12% 14% "09 "10 "11 "12 "13 14

Table 9: Percentage of total output units produced by each institution (2009-2014)

UKZN UP UCT SU WITS UNISA NWU UJ UFS RU UWC NMMU TUT UFH UL UV CPUT DUT UZ VUT CUT SMU WSU MUT UMP

Impact of subsidy and tuition fees on NWU

NWU Income mix

Bursaries

Fees covered by bursaries

NWU R180m NSFAS R261m External R252m

Assistance with registration

• Students financed by bursaries.
• Written proof of the bursary must be submitted during registration.
• Where an outstanding balance of previous year is payable, and the

bursary providers have undertaken in writing to pay for that too, students are allowed to register.

• Students financed by bank loans and Eduloan
• Written proof thereof must be submitted during registration.
• Where an outstanding balance of previous year is payable, and the loan

provides to pay for that too, students are allowed to register.

• Realpay instalment option for students
• In certain programs a pilot was done where students were allowed to

pay only the prescribed registration fees and sign a debit order to repay the remaining balance over a period of time.

Assistance with registration (continue)

• Individual student cases are considered e.g.
• Academic performance
• Few number of modules outstanding for completion
• Needy students that qualify for merit bursary that would cover 1st

payment. (Based on terms and conditions)

• Investigating extension of pilot project to pay in installments via

Realpay.

• Investigating possible presence of several financial institutions

during registration period to assist with loans.

Cross-subsidization between income streams

R45m deficit added

0% fee increase – Impact for NWU

Assumption: NWU can continue to increase tuition fees for 2017 and 2018 by 9,5% per year, but the phased-in premiums will not be implemented…

Increase in bad debts due to Fee Free Education expectation…

Budgeted income mix 2015 – 2016 and projection 2017 – 2018 if funding framework doesn’t change…

Towards a sustainable National Student Loan regulatory framework – NWU view

“Overcoming poverty is not a task of charity, it is an act of justice. Like slavery and apartheid, poverty is not natural. It is manmade and it can be overcome and eradicated by the actions of human beings. Sometimes it falls on a generation to be great. You can be that great

• generation. Let your greatness blossom.” ~ Nelson Mandela

• 1. Importance of Higher Education and Training

Table 4: Unemployment rate of the working-age population of South Africa at the fourth quarter of 2015

Education level Unemployment rate Less than matric 28.5 Matric 25.5 Other tertiary 15.6 Graduate 5.1

• 1. Importance of Higher Education and Training

Table 5: Education levels of South Africa’s citizens in comparison with the United States set out as percentages of the labor force Education Level South Africa (Stats SA, 2015) United States (Bureau of Labor Statistics, 2016) Less than matric 60.9 7.9 Matric 26.7 25.9 Other tertiary 7.1 27.4 Graduate 4.4 38.8 Other 1.0

• Total

100 100

• 1. Importance of Higher Education and Training
• Employment
• Increased quality and quantity in the workforce
• Improved quality of products and services
• Improved economy
• Improved earnings
• Increased tax base (SA tax revenue = Individuals (37.5%) and

corporations (16.9%) (National Treasury, 2016).

• 1. Importance of Higher Education and Training

Improved economy Job

• pportuni-

ties Increased tax pool Increased funding to education institutions Improved education levels of population Improved products & services

• 2. Viability of Fee Free Higher Education in SA
• 2015: Tuition fees =

= R25 710 to R64 500 averaging R45 105

• 2013: Student numbers = 983,698 students
• It will cost the government at least R44.4 billion to achieve tuition

free education

• This excludes:

– Additional NSFAS funding for accommodation, etc. as well as funding for infrastructure and other earmarked grants – Growth objectives of the government to increase of enrolment at universities to about 1.62 million

• 2. Viability of Fee Free Higher Education in SA

Table 1: Minimum annual funding required from Government for tuition free higher education Description Amount (R bn) Tuition fees required (2015 tuition fees × 2013 student numbers) 44.37 2016 NSFAS funding for accommodation, meals, books and travel (R8.9bn × 37.2%) (Department of Higher Education and Training, 2016) 3.31 2016 Buildings & other infrastructure earmarked grant (Department

• f Higher Education and Training, 2016)

2.43 2016 Development funds earmarked grant (Department of Higher Education and Training, 2016) 1.63 2016 Other earmarked grants (Department of Higher Education and Training, 2016) 2.23 Total 53.97 Total funding provided in 2016 36.86 Minimum shortfall for free higher education 17.11

• 2. Viability of Fee Free Higher Education in SA
• Government contributes approximately 0.9% of GDP to higher

education, therefore GDP needs to grow by R1.9 9 trilli lion

• n to sustain

free higher education

• South Africa’s economy decreased by 1.2% in the first quarter of

2016

• Nothing is free, the question is: Who pays?
• Other sectors?
• Tax payers? Graduate tax? Reduced spending, weakened

economy.

• Priorities set by government will determine the distribution of

available funds

• Fee free higher education is not viable in South Africa
• Fee free higher education for the poor? Missing middle?

• 3. Government Objectives vs Issues of HEIs
• Government objectives include:

– Growing enrolments: By 2030, increase of enrolment at universities from 950 000 to about 1.62 million, increasing the doctoral qualified staff in higher education from 34% to 75%, increase annual doctoral from 1 420 to 5 000 – Improvement in quality education – Innovation through research

• However, HEIs face issues:

– Objectives set by Government require universities to significantly expand its infrastructure, to establish effective administrative systems, and to recruit, train and retain high quality higher education staff – Low graduation rates (SA: 15% vs Int: 25%) – Current schooling system (numeracy rate of 11% of grade 9 pupils) – All requiring significant funds

• 4. HEI Funding

Source 2000 2012 Student fees 24 31 Government 49 40 Third stream 27 29 Total 100 100

Table 2: South African higher education income sources

Between 2000/01 and 2014/15:

• Student numbers increased by 69.8%
• Total State finance for universities as a proportion of GDP increased

by only 25.4 per cent

• Total State finance for universities as a proportion of total State

expenditure decreased by 9.8% for the same period

• 4. HEI Funding

0% 2% 4% 6% 8% 10% 12% 2009 2010 2011 2012 2013 Increase in total subsidy per student Increase in university fees Graph 1: Displaying the growth in total government funding per student in relation to the increase in university fees from 2009 to 2013

• 4. HEI Funding

Year Annual increase rate in cost of Education (Stats SA, 2016b) Average inflation rate of South Africa (CPI) (Inflation.eu, 2016) Annual NWU internal inflation rate (North-West University, 2016) 2016 0.00 6.55 8.18 2015 9.30 4.51 9.25 2014 8.70 6.13 10.59 2013 9.00 5.77 10.36 2012 9.00 5.75 9.58

[1] The average of 12 monthly inflation rates of a calendar year.

Table 3: A five year comparison of annual fee increases at South African universities in comparison with the country’s inflation rate, as well as North-West University’s internal rate of inflation

• 4. HEI Funding

Corruption and inefficiencies cause the distributable tax pool to decrease:

• In 2009, Government

corruption totalled R70 billion (News24, 2012)

• Estimate of 20 percent of the

GDP is lost to corruption annually (News24, 2012)

• 3 years of social grants = 12

years funding for HE Figure 1: Illustrating the proposed method of improving South Africa’s economy by way of increased education levels.

• 5. Proposed Framework

a) Current contribution from Government to the NSFAS b) Challenges of the current NSFAS framework c) Examination of other countries d) Proposed new framework

a) Current contribution from Government

• Current NSFAS system (Twenty-four percent of the funding

allocated to universities from Government, relates to the NSFAS (Department of Higher Education and Training, 2016))

b) Challenges of Current Framework

• 2010: 72% of students that receive funding from NSFAS do not

become graduates

• All or nothing (2013: funded 20% of total students – missing middle)
• Low repayment (If a student therefore earns R59 300 per annum

and received the maximum loan amount for three years of R215 400 (R71 800 x 3 years), it will take approximately 45 years to repay the capital loan amount)

• Resources not well governed (2014/15: only about 3.5% of funds

distributed through the NSFAS are collected)

c) Examined other countries

• Examined international countries e.g. Australia (basis of NSFAS) &

Norway (pays semester fee)

d) Proposed New Framework

i. Apply NSFAS as a Government loan fund, available to all students, and not only the poor, by implementing a sliding scale based on the Individual Tax Tables. ii. Formalise requirements to qualify for a Government loan fund through the South African Revenue Service (SARS). iii. Reward academically deserving students with merit-bursaries to reduce the loan balance for tuition fees. iv. Enforce repayment terms with interest through SARS. v. Make use of SARS to collect repayments from students’ salaries.

i. Implementing a sliding scale based on the Individual Tax Tables.

Taxabl able incom

• me (R)

Qualifying ng % of

• f loan amount

unt 0 – 188 188 000 000 100% of (100% tuition fees, accommodation, meals, books and travel) 188 188 001 001 – 293 293 600 600 80% of (100% tuition fees, accommodation, meals and books and 50% of travel) 293 293 601 601 – 406 406 400 400 60% of (100% tuition fees and accommodation and 50% of meals, books and travel) 406 406 401 401 – 550 550 100 100

40% of (100% tuition fees and 75% of accommodation and 50% for meals and books and 25% of travel)

550 550 101 101 – 701 701 300 300 20% of (100%tuition fees and 50% of accommodation) 701 701 301 301 and and above 10% of (100% tuition fees)

Table 10: A proposed framework for applying Government loan funding for higher education per income tax bracket based on family income.

ii. Formalise requirements

• Meet APS requirements for entrance
• Requirements for continuance of studies (e.g. 60% of modules)
• Obtain IT nr before student registration

• iii. Merit bursaries

Scar arce e skills Other skills Aver erage age % achiev eved ed for total modul ules es % merit bursary relating to tuition fees Average % achieved for total modules % merit bursary relating to tuition fees 75% > 100% 75% > 100% 65% - 74% 74% 90% 70% - 74% 90% 55% - 64% 64% 70% 65% - 69% 70% 50% - 54% 54% 40% 60% -64% 60% 55% - 59% 50% 50% - 54% 40%

Table 11: Proposed average to obtain for conversion of the NSFAS loan to a bursary, distinguished between scarce skills and other skills. Only if graduated

• iv. Enforce repayment
• Enforce repayment @ current terms
• 80% of repo

v. Use SARS for collection

• Collection on the same basis as ITA88

• 6. Closing Suggestions

1. Address leakages (corruption and inefficiencies) in the State budget and prioritise economic growth to increase available Government funding; 2. Transform discussions surrounding fee free higher education to subsidised higher education; 3. Increase Government funding to universities to preserve and improve quality higher education services; 4. Effectively apply the already implemented National Student Financial Aid Scheme as a means to a sustainable student fee regulatory framework with specific focus on collection of loan amounts; 5. Address inefficiencies in the current schooling system; 6. Increase focus on TVET colleges and vocational training to improve efficiency at universities

• 7. Limitations
• Time constraints
• Data availability – student number, info on tax payers – how many in

which bracket? How many of their children are studying?

Thank you