STATUS AND EFFECTIVENESS OF STUDENT FUNDING IN SOUTH AFRICA Context - - PDF document

1 STATUS AND EFFECTIVENESS OF STUDENT FUNDING IN SOUTH AFRICA Context and Key Challenges HESA presentation to the Parliament’s Standing Committee on Appropriations Parliament of South Africa, Committee Room 1, Cape Town Tuesday, 21 October 2014 1 INTRODUCTION The post-apartheid era in South Africa has spawned much analysis and commentary about the challenges facing universities in a changing world. Some changes are social, economic, political and cultural, with a direct bearing

• n the performance of the Higher Education sector as a whole. Inarguably, the most pressing challenges facing
• ur system in the current period are (i) Funding and (ii) Improving student success rates. Before a brief input

is made on the two matters above, an overview of the system shows rapid expansion in the last few years. Figure 1& 2: Student Enrolment and size of the post-school system:

2

6

Student Enrolment

Total number of students 2010 2011 2012 2013 (preliminary)

Total number of students

892 943 938, 200 953 373 983 698

Total number of international students

66 181 70 060 72 857 73 859

Number of students (FTE) 600 002 628 409 634 548 665 857 Post-graduate students 138 610 147 893 149 027 159 750 Post-graduate students (international students) 18 845 20 046 20 770 23 364

Source: DHET (HEMIS data)

3

The South African Post-school System 2012

(Sources: DHET, 2012. Statistics on Post-School Education and Training in South Africa & HEMIS, 2012. StatsSA Census 2011)

Source of the slide: Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & CHET

As can be discerned from the table above, the University system remains the biggest of the three; and the TVET college sector is rapidly expanding to accommodate the bulk of post-school students in years to come. Both the National Development Plan and the DHET’s White Paper on Post-School Education and Training system have set a growth target for the university system to grow from 983 698 (2013 preliminary, unaudited figures) to 1.6 million students in 2030. A large portion of the projected growth will have to be funded by the state. 2 KEY ISSUES FOR DISCUSSION Proceeding from the premise that both the DHET and NSFAS will highlight with some level of details the funding framework and its challenges (informed by the Report of the Ministerial Committee for the Review of Funding of Universities), our input is confined to Funding and Student Success Issues at the level of generality. Our input goes further to make recommendations on how each of the challenges could be resolved. 2.1 Funding of the Higher Education System As a way of giving context to the issue, it should be noted that since 1994, government’s support for higher education has been significant. The funding of universities has been on an upward trend, from R11 billion in 2006 to R26 billion in 2013. While the increases are welcome, it should be noted that higher education expenditure has been declining alarmingly in student per capita terms due to growing student enrolments during the period. The expenditure has also been declining as a percentage of the Government's budget and of GDP.

4 This decline in Government subsidies has put pressure on the other two sources of income available to universities viz tuition fee income and third stream income (typically research grants, contract income, donations etc). While universities have increased levels of third stream income to some degree these increases by no means compensated for declines in Government subsidies, leaving universities in increasingly worsening financial positions. The table below aptly illustrates the shrinking of the government’s funding proportion, and the steady increase of student fees as a proportion of total funding. Figure 3:

Govern rn men ent 15.93 Govern rn men ent 19.89 Studen ent fe fees es 7.80 Studen ent fe fees es 15.66 Third d strea ream 8.78 Third d strea ream 14.08

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2000 2010

Higher education income sources, ZAR (billion)

(Source: DHET, Financial Statements in Annual reports submitted by Universities)

Source of the slide: Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & CHET

Although the allocation to the NSFAS is set to increase from R5.1 billion in 2013 to R6.6 billion in 2016/17, the annual student protests at some universities highlights the sad reality that the allocation is not adequate to meet the funding needs of students eligible for NSFAS loans and bursaries. Apart from the inability of NSFAS to fund the increasing number of eligible students already in the system, three other factors are likely to compound the funding challenge of universities in the short to medium-term:

• a. The White Paper on Higher Education and Training (ibid) sets a target of university participation

rate of 25% by 2030 (representing an enrolment of around 1.6 million students) through “planned growth”. It also reaffirms the principle of cost recovery of loans as the basis for a sustainable national student financial aid model. It further makes a commitment to progressively introduce "free education for the poor in South Africa as resources become available".

5

• b. The NDP (NPC, 2011) also proposes an increase of gross enrolments from 950,000 in 2010 to 1 6

million in 2030. The Plan admits that a ‘greater understanding within government is required to acknowledge the importance of science and technology and higher education in leading and shaping the future of modern nations’ (ibid). Given this acknowledgement, it is becoming self-evident that without such a guaranteed increase in state revenue, attempts at expansion cannot succeed.

• c. The class of 2013 achieved a National Senior Certificate (NSC) pass rate of 78%, the highest since
• 1994. The number of bachelor’s passes increased by 60%, and the number of overall passes increased

by 32% (DBE, 2014). It is projected that this number of passes will increase in the coming years, putting pressure on universities and other post-school education and training institutions. Figure 4: Higher Education as % of GDP

4. 4.47 47 2. 2.18 18 2. 2.04 04 1. 1.76 76 1. 1.44 44 1. 1.39 39 1. 1.38 38 1. 1.24 24 1. 1.20 20 1. 1.15 15 0. 0.95 95 0. 0.93 93 0. 0.71 71

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

Expenditure on higher education as % of GDP, 2010

(Source: OECD, downloaded from http://data.uis.unesco.org)

Source of the slide: Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & CHET.

Higher Education as an expenditure of GDP remains woefully low. South Africa is spending far less on Higher Education as a % of the GDP compared to both emerging and developed economies. If this projected growth has to be realised, Higher Education as a % of GDP has to increase significantly in line with that of most emerging countries. Sustainable ways through which the projected student enrolment growth in universities will be funded and ensure that NSFAS support is sustained over time should be found in order to make possible increased participation in

6 higher education to meet both equity and growth targets. It was in the light of this reality that HESA convened a Colloquium in July 2014 involving the following partners:

• a. National Treasury;
• b. Department of Higher Education and Training;
• c. Higher Education South Africa (HESA);
• d. National Student Financial Aid Scheme;
• e. The Presidency; and
• f. South African Students Union

From the Colloquium, the following resolutions, amongst others, were adopted for further exploration: Issue Description Policy Dialogue

A Policy Dialogue will be constituted as soon as possible in order to take forward the matters arising from the colloquium, as well as to address further policy development issues emerging from, amongst others, the NSFAS Review and Funding Review reports. The Policy Dialogue is to comprise 3 representatives each from the DHET, NSFAS, HESA, National Treasury and SAUS. The DHET will act as convener of the Policy Dialogue.

Dealing with Fraud

The colloquium noted that fraudulent activities divert resources of NSFAS away from eligible

• students. Fraud needs to be stemmed so that resources are freed up for needy students. HESA

and the NSFAS will set up a Task Team to look at how best to identify fraud and to prosecute

• ffenders

Review Final Year Programme

A review of the Final Year Programme should be conducted to determine its effectiveness.

Review of Merit Scholarships

HESA should undertake a review of merit scholarships in order to inform a system wide decision as to whether these funds should rather be used to augment financial aid. This matter will be discussed by HESA and a sector-wide decision made.

Phasing out of Rebates

There was in-principle agreement that the phasing out of rebates (bursary components to NSFAS awards, very low interest rates for loan repayments etc.) would release more funds and improve the sustainability of the NSFAS and should be supported.

Loan Recovery

The National Treasury should investigate an augmented role for SARS in the recovery of loans. The National Treasury should also advice on whether there should be an investigation into a graduate tax.

Notwithstanding these measures, HESA is of the firm view that the projected student enrolment growth of the system is dependent on “new money” being secured for NSFAS for the next 14 years, i.e. until 2030. In addition, since such student growth will put pressure on university infrastructure and the teaching and support service staff, the size of block grant and other forms of earmarked funding will have to increase significantly over the

• period. In the absence of “new money” for both NSFAS and government subsidies, the Higher Education System

will not meet the enrolment targets set in both the White Paper and NDP; student fees will inevitably increase exponentially often beyond the affordability levels of fee-paying students. This is at the heart of our funding challenge.

7 It is our view that answers should be found for the following fundamental questions:

• 1. How is the projected student enrolment growth in universities going to be funded in the context of a

projected tighter fiscal space for the coming years?

• 2. How will NSFAS support be sustained overtime, in order to make possible increased participation in

higher education to meet both equity and growth targets?

• 3. What is required to plan for, and adequately resource the expected growth given the tighter fiscal space

and the funding shortfall for students who are already in the system?

• 4. How does the state align the policy aspirations expressed in the White Paper and NDP and available

funding to ensure that enrolment growth, equity and quality are all pursued simultaneously? 2.2 Student access, opportunity and success: Expansion and greater equity, low participation, high attrition andlow completion, and variable quality In our submission to the Portfolio Committee on Higher Education and Training on 5 March 2014 (HESA, 2014), we made the following observations about the issue which are worth over-emphasising: On the eve of democracy, the gross participation rate1 in higher education was 17%. “Participation rates were highly skewed by ‘race’: approximately 9% for Africans, 13% for Coloured, 40% for Indians and 70% for whites” (CHE, 2004:62). In 1993, while black (African, Coloured and Indian) South Africans comprised 89% of the population, black students constituted 52% of a total of 473 000 students. African South Africans, although constituting 77% of the population, made up just 40% of enrolments. White South Africans comprised 11% of the population, but white students constituted 48% of enrolments. At 43%, there was also under-representation of women as students.These statistics, taken together with the patterns of enrolments by fields of study, qualifications levels, and mode of study, reflect the relative exclusion of black and women South Africans in higher education in 1994.” Post-1994, significant achievements have been the almost doubling of student enrolments, more equitable access to higher education and a more representative student body. By 2011, black students comprised 81% of the total student body of 938 200, and women 58% (CHE, 2013). A number of mechanisms have supported greater equity and redress in higher education enrolments: the outlawing of racial and sex discrimination; affirmative action; alternative admissions tests to complement the national final secondary school examination; the recognition of prior learning to facilitate access for mature students;extended curriculum programmes for students that show potential, and a state-funded national student financial aid scheme. Throughput, drop-out, undergraduate success and graduation rates all make clear that a substantial improvement in equity of opportunity and outcomes for black students remains to be achieved. For example, given a target national norm of 80%, the white student success rate in 2010 was 82% at the undergraduate level; that of African students was 71% (CHE, 2012:11;12). Internationally, the graduation

1The total enrolment in higher education as a proportion of the 20-24 age group.

8 rate norm for a three-year degree programme is 25% (DHET, 2013:32). In 2010, the graduation rate of African students was 16%, and that of white students was 22%, with an average of 17%(CHE, 2012:9). In so far as throughput and drop-out rates for a three-year degree at contact institutions are concerned, 16%

• f African students that began study in 2005 graduated in the minimum three years, 41% graduated after

six years,and 59% had dropped out. In the case of white students the comparative figures were 44% of students graduated in the minimum three years, 65% graduated after six years, and 35% had dropped out (CHE, 2012:51). The figures for three-year diplomas at contact institutions were worse: after six years 63%

• f African students had dropped out and 45% of white students (CHE, 2012:50). A recent CHE study notes

that “only about one in four students in contact institutions…graduate in regulation time”; only 35% of the total intake, and 48% of contact students, graduate within five years”, and that “it is estimated that some 55% of the intake will never graduate” (CHE, 2013:15 ). To illustrate this, the 2006 cohort study by the CHE (2013) shows the following: Table: Completion rates of all first-year entering students: 2006 cohort (CHE, 2013: 45) Graduated within 5 years (%) Estimated % that will never graduate Contact institutions 3- year degrees 53 41 4-year degrees 49 41 All 3-& -4 year degrees 52 41 3-year diplomas 42 50 All 3 & 4 year qualifications 48 45 UNISA 3- year degrees 9 72 4-year degrees 8 72 All 3-& -4 year degrees 8 72 3-year diplomas 2 89 All 3 & 4 year qualifications 6 78 All Institutions 3- year degrees 38 52 4-year degrees 37 50 All 3-& -4 year degrees 38 51 3-year diplomas 30 62 All 3 & 4 year qualifications 35 55 Source: CHE (2013). The situation at a post-graduate level (particularly doctoral level) is equally worrying. See figure 5 & 6 below.

9

Progress of the 2006 new doctoral entrants after 7 years by race, gender & nationality

(Source: DHET & CHE Cohort Analysis (2014))

45% 47% 46% 45% 39% 41% 47% 51% 46% 55% 53% 54% 55% 61% 59% 53% 49% 54%

National International Female Male African Coloured Indian White Total

% graduated % dropped out or incomplete

Source: DHET & CHE, Cohort analyses, 2014

Source of the slide: Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & CHET. Doctoral graduates according to nationality as % of total doctoral graduates, 2012

(Source: DHET (2013 HEMIS)

16.9% 4.6% 5.9% 39.0% 66.5% 14.3% 13.4% 27.7% 5.8% 1 878 graduates 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

South African African South African Coloured South African Indian South African White South African Total Graduates: Other SADC Graduates: Other African Countries Subtotal: All African countries (SA Excluded) Graduates: Other Foreign Total

Source of the slide: Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & CHET.

10 These realities “have the effect of negating much of the growth in black access that has been achieved” (Scott, et al, 2007:19).They are “indicative of a…higher education system…that is unable to effectively support and provide reasonable opportunities for success to its students. The situation reflects an inefficient use of the country’s resources” (DHET, 2013:2).They also have “central significance for development as well as social inclusion”, and “equity of outcomes is the overarching challenge” (ibid.:19). If universities “are to contribute to a more equitable South African society, then access and success must be improved for black (and particularly black working class) students who, by virtue of their previous experiences, have not been inducted into dominant ways of constructing knowledge” (Boughey, 2008). A key argument is that the under-performance of black students “will not change spontaneously. Decisive action needs to be taken in key aspects of the educational process – and at key points of the educational ‘pipeline’ – to facilitate positive change in outcomes”2 (ibid.:20). Moreover,“systemic responses are essential for improving the educational outcomes”; the “necessary conditions for substantial improvement include: the reform of core curriculum frameworks; enhancing the status of teaching and building educational expertise…to enable the development and implementation of teaching approaches that will be effective in catering for student diversity; and clarifying and strengthening accountability for educational

• utcomes (ibid.:73).

For another, the CHE’s recent proposal for “undergraduate curriculum reform in South Africa” deserves serious consideration as a way of overcoming the current scenario of “high attrition and low graduation rates (which) have largely neutralised important gains in access” (CHE, 2013:9). The CHE argues that “modifying the existing undergraduate curriculum structure is an essential condition for substantial improvement of graduate output and outcomes”, and advocates “a flexible curriculum structure for South Africa’s core undergraduate qualifications” (ibid.:16). In practice, this would mean that “to meet the needs

• f the majority of the student intake, the formal time” of all current undergraduate qualifications would be

increased by one year, and “to provide effectively and fairly for diversity in preparedness, the new curriculum structure (would) be flexible to allow students who can complete a programme in less than the formal time to be permitted to do so” (CHE, 2013:20). In order “to ensure the maintenance or improvement

• f the standards of qualifications, curricula in the new structure (would) retain or improve upon existing exit

standards through utilising the additional curriculum space afforded to ensure realistic starting points and progression paths, and to introduce valuable forms of curriculum enhancement”(ibid.:20). The CHE is well aware that such a new curriculum structure will entail significant transformation in the field of learning and teaching– which needs to be linked to building the academic capabilities of universities. Whereas the current poor success rates are a tragic wastage of youth talent and potential and scarce financial resources, their improvement and meaningful opportunities for disadvantaged students to succeed has great value for diversity and quality within universities.

2“Such key points occur particularly at the interface between major phases of the system: between general education and FET, for example, as well as between

FETand higher education, and, increasinglysignificantly, between undergraduate and postgraduate studies….(C)ontinuity in the system as a whole is necessary for improving graduate outcomes, without which meeting national developmental needs will continue to be an elusive goal” (Scott et al. 2007:20).

11 From the above input, few issues seem to be at the centre of the low throughput rate:

• a. Inadequate funding available to students;
• b. High student-lecturer ratio and class sizes;
• c. Under-preparedness of students coming from the schooling system into universities;
• d. Uneven attention paid to teaching as a core mission of universities;
• e. Qualification profile of academic staff in our universities;
• f. Other non-academic factors including living conditions of students; institutional culture, social and cultural

capital students, etc. (Lewin & Mawoyo, 2014) etc.; and

• g. Structure of our undergraduate qualification (CHE 2013).

In order to improve the throughput rates, a national effort is required to:

• a. Develop teaching approaches that will be effective in catering for student diversity (Scott et al, 2007).
• b. Strengthen a more targeted Teaching Development Grant spur creativity and innovation within

universities- DHET should be commended for beginning to redirect the grant to improve teaching efficiencies in the system.

• c. Reform of core curriculum frameworks;
• d. Enhance the status of teaching and building of educational and professional expertise within universities
• e. Build and retain the next generation of academics and improve the qualification profile of the academic

workforce, including their professional teaching qualifications;

• f. Strengthen university foundation programmes and
• g. Clarify and strengthen accountability for educational outcomes in the system.

Conclusion Our major concern is that a massive expansion planned for the sector is not matched by a coherent financing

• plan. Related to this is a concern that such expansion is not linked to the existing capacities and capabilities
• f the system. There is a need for a broader discussion on how the challenge of increasing enrolment targets

can be pursued simultaneously with improving the throughput rates within the sector. A hard conversation is required to forge a national consensus on this issue. Such a consensus could emerge in a discussion involving the following bodies:

• a. The Presidency (custodian of the National Development Plan);
• b. National Treasury (custodian of the national fiscus);
• c. Department of Higher Education and Training (responsible for HE funding and steering);
• d. National Student Financial Aid Scheme (provides support to poor students);
• e. Higher Education South Africa (a body representing the interests of public universities in South Africa);

and

• f. Parliament (both the Portfolio Committees on Higher Education and Training and Finance; and the

Standing Committee on Appropriations).

12 At such a meeting, hard choices will have to be made and trade-offs weighed on the balance of evidence. HESA believes that such a multi-stakeholder discussion can help resolve the funding impasse our system is faced with. References Centre of Excellence in Scientometrics and STI Policy, University of Stellenbosch & Centre for Higher Education Transformation. 2014. Slides used for figure 2-6. Council on Higher Education (2014) VitalStats: Public Higher Education 2011. Pretoria: Council on Higher Education Council on Higher Education (2013) Higher Education Participation 2011. Pretoria: Council on Higher Education http://www.che.ac.za/sites/default/files/publications/Higher%20Education%20Participation%202011.pdf Council on Higher Education (2012) VitalStats: Public Higher Education 2010. Pretoria: Council on Higher Education Department of Basic Education (2014) Announcement of the 2013 NSC Grade 12 examinations results by Mrs Angie Motshekga, Minister of Basic Education. Pretoria: DBE Department of Higher Education and Training (2014) White Paper for Post-School Education and Training: Building an Expanded, Effective and Integrated Post-School System. Pretoria: DHET Department of Higher Education and Training (2013) Ministerial Statement on the Management and Utilisation

• f Teaching Development Grants. Pretoria: DHET

Department of Higher Education and Training (2014) White Paper for Post-School Education and Training. Pretoria: DHET Department of Education (2010) Education Statistics in South Africa 2009.Pretoria: Department of Basic Education Department of Education (1997) Education White Paper 3: A Programme for the Transformation of Higher

• Education. Government Gazette No. 18207.

Higher Education South Africa (2011) Proposal for a National Programme to Develop the Next Generation of Academics for South African Higher Education. Higher Education South Africa, Pretoria Higher Education South Africa (2014) South African Higher Education in the 20th Year of Democracy: Context, Achievements and Key Challenges. An input made to the Portfolio Committee on Higher Education and Training, 5 March 2014.

13 Lewin, T & Mawoyo, M. (2014). Student access and success: Issues and interventions in South African

• universities. A report for Kresge Foundation. The South African Institute for Advancement.

Ministry of Education (2001) National Plan for Higher Education. Pretoria National Planning Commission (2012) National Development Plan 2030 - Chapter 9: Improving education, training and innovation. Pretoria: The Presidency http://www.npconline.co.za/MediaLib/Downloads/Home/Tabs/NDP%202030-CH9- Improving%20education,%20training%20and%20innovation.pdf (accessed 4 May 2013) National Planning Commission (2011) National Development Plan 2030 - ‘Human conditions diagnostic’. Pretoria: The Presidency http://www.npconline.co.za/MediaLib/Downloads/Home/Tabs/Diagnostic/Diagnostic_Human_conditions.pdf(ac cessed on 27 April 2013) Scott, I., Yeld, N. & Hendry, J. (2007) A Case for Improving Teaching and Learning in South African Higher Education: Higher Education Monitor No. 6. Pretoria: Council on Higher Education.