South Africans welcomed, albeit with caution, the announcement made late last year by former President Jacob Zuma, that free education will be implemented starting in 2018. The State of the Nation Address and the recent Budget Speech affirmed this decision and free education is now being rolled out.

Many people and organisations have focused on what socio-economic impact free education will have on the trajectory of poor and working-class students. What is less focused on is the transformative nature of free education for previously disadvantaged universities. The reality is that many black poor and working-class students enrol in these institutions.

The implementation of free education in the South African post-schooling sector has a direct and equalising effect and will go a long way in developing our previously disadvantaged universities. This decision carries the potential of ending the scattered and fragmented nature of our higher education system which has very poor and underdeveloped institutions on the one hand and highly developed and modern institutions on the other hand.

Universities mostly rely on three forms of funding for them to deliver on their essential mandate. Fees are the primary source of funding. The second source is grant funding from government, while the third source is funding from private partners and donors.

During the #FeesMustFall protest many universities were concerned about the elimination of fees as a primary method of transaction between the institution and the student. The reality is that while a fee-free environment is desirable, this cannot be implemented without a clearly defined plan on how higher education is to be funded. The #FeesMustFall protest brought to light the need for a truly publicly funded higher education system and it placed this demand at the door of government.

The concern regarding future fee arrangements is therefore genuine by universities as it lies at the core of their essential mandate. It should however be noted that the universities have in the past hiked fees under the disguise of improving academic provisioning. These fee hikes is what triggered the 2015 #FeesMustFall protests.

In its presentation to the Fees Commission in 2016, Statistics South Africa (StatSA) reveals that higher education fees in South African increased 25% above inflation from 2008 to 2015 until the no-fee increase which took effect from 2016. The number of South Africans living under the poverty line increased to 55% (30.4-million people) in 2015.

Our forebears taught us that the basic way of getting out of the poverty trap is through education and the reality is that previously disadvantaged institutions admit many students from poor backgrounds. These institutions are thus playing a key role in our society and over the years they have been failed by the fact that higher education in our country is not properly funded.

These institutions are forced to rely on study fees to run their operations with most of them relying on fees for more than 50% of their budgets. Whilst study fees are counted in the budgeting of these institutions, the reality is that this is not guaranteed income as most of the students they admit are too poor to be able to pay fees resulting in high levels of student debt in these universities. In essence this is what makes the previously disadvantaged institutions unsustainable and this is why most of them have been capitals of strikes in higher education.

Corporate donors and partners (often referred to as third-stream funding) mostly go to developed universities, providing funding for around 40% of their budgets. In 2014, the University of Stellenbosch for instance had about 57% of its operations funded by donors with fees accounting for 25% of the university’s budget for the year. This does not mean that the institution charges low fees, but it shows that the fee amount is little when compared to the huge funds coming from the private sector. On top of this, the university is guaranteed that it will receive fees from students as it registers students generally come from wealthier backgrounds.

Over the years, the government subsidy has not been able to address this historical injustice mainly because it has always been based on research output and academic throughput. There was hope when the then Minister of Higher Education, Dr Blade Nzimande announced the Ministerial Committee for the Review of the Funding of Universities in 2011 chaired by the current President, Cyril Ramaphosa. It is however sad that after reporting in 2013, the recommendations of this team have not yet been implemented. We can only assume that the reviewed funding framework has not yet been finalised as the old funding model is still in use.

The current Higher Education Ministerial Statement on university funding which gives guidance on grant allocation is based on the old funding model. The National Treasury’s Estimates of Expenditure for the Department of Higher Education show that for the 2017/18 financial year, the University of Stellenbosch was allocated R1, 39-billion whilst the University of Zululand received a mere R450-million. The University of Pretoria received an allocation of R2-billion and Walter Sisulu University only received R689-million.

Compounding this is the reality that the government subsidy to the higher education sector has been dwindling in real terms. The Council on Higher Education’s (CHE) submission to the fees commission underline this fact and states:

“Long-term underfunding of higher education amidst rising costs have led institutions to raise fees markedly every year, rapidly outpacing inflation. Management cultures have changed significantly to focus on economic and compliance imperatives.”

Many previously disadvantaged universities have not been receiving third stream funding. South African corporate sponsors do not view supporting these institutions as part of playing their role in development, they want to have their brands associated with the prestigious universities.

The CHE’s 2017 VitalStats publication makes a revelation that donor funding only accounts for 1% of Walter Sisulu University’s (WSU) budget while it accounts for 41% for the University of Cape Town. This is why there are always academic, administrative and financial challenges in institutions such as WSU as indicated by the recent accreditation withdrawal of their LLB and the dissolution of the university’s council in 2011.

While the current format of free education can be criticised for failing to de-commodify higher education, it however assists in correcting some fundamental problems of the sector. It will ensure that all universities now are guaranteed income from study fees and this will favour the previously disadvantaged institutions.

Corporate sponsors will start associating with these previously disadvantaged institutions the moment their finances stabilise and their academic programme improves significantly. This means that the third-stream funding of these universities will start to improve as their conditions are improved due to a stable fees account.

The fortunes of these institutions will improve and provided that the funding framework is not changed, they will further benefit greatly from government grant funding as their academic throughput and their research outputs will start to improve.

Government should ensure that it funds previously disadvantaged institutions to properly equalise the higher education system and guarantee quality education for all. The arguments raised here should never be misread to mean that by introducing free education our government has equalised the system. This is just the beginning to achieving an equalised and transformed higher education landscape. DM

Luzuko Buku is a former Secretary General of SASCO and a Member of the Council on Higher Education. He writes this in his personal capacity