We need to rethink how to fund education in the age of unemployment and student debt

Higher education remains grossly unequal and poorly funded in South Africa. It’s not so much a well-worn refrain about the historical conditions that produced this truism (colonial occupation, advanced education for an elite and basic education for its labour) as the hard-to-swallow, continued experience of inequality more than three decades since the end of apartheid. 

Present-day inequality takes many forms, one being the capacity of historically disadvantaged institutions (HDIs) to cope with the crippling and ever-rising levels of student debt in their books or their ability to leverage financial support for students who are not funded. HDIs face this in the context of severe resource constraints in the national fiscus. 

Euphemistically, the discourse concerning this group of students is “the missing middle”. However, these students who are “missing”, from the view of public funding, are real people who have real prospects and needs and who are not invisible to their families, communities or universities. It is indeed a contradiction to refer to them as “missing”.

On the other hand, historically advantaged universities have deeper pockets to provide support to such students. For example, the SABC reported in January this year that a university was able to allocate around R1-billion towards assisting students who are struggling to pay their fees. Historically advantaged universities also have the means to leverage higher fees (another historical factor) and better facilities to cushion the impact of being unfunded or underfunded. The point is not to “guilt” some institutions, because all, despite their different histories, must deal with this national challenge: everyone’s challenge.

“Us and them” blaming in the higher education sector or pitching institutions against the government is unproductive. The challenge is not simply an urgent economic need, but an important socio-economic opportunity for South Africa to rethink the fundamental transformative purpose of education, rather than to focus only on its value, relative to jobs, the economy and prosperity. This is a need which we can address, and should address together as the education sector, the government and industry. Moreover, at the back of my writing about the issues of inequality affecting students and universities, I do want to ask the question about the purposes of student debt, in the context of unemployment and the many other kinds of inequality. 

At the University of the Western Cape (UWC), the combined historic and current student debt was R1.7-billion at the end of the 2025 registration cycle. Of this, historic debt exceeded R620-million. The university makes modest progress year on year in debt recovery: by July 2025, R217-million was recovered directly from students and parents. 

It costs to chase the money, but in Sisyphean terms we never ascend the debt mountain, ever, with our gross student debt constantly growing by approximately R50-million per year. Unsurprisingly, student debt is a racialised and gendered issue (at UWC, women students and particularly black women students owe more) inasmuch as it is a financial one. 

This data is illuminating. Approaches to student debt are different between universities: some withhold certificates until debt is paid, some make use of debt collection agencies, or other measures, depending on what can be afforded, to recover outstanding debt. 

Education as a human right cannot be made the subject of bubble and burst economics.

A consequence of this is that it makes the issue an individual institutional issue, rather than the national issue, which it is. That conundrum in itself might be argued away, except for the fact that in the context of rising unemployment, the prospect of indefinite levels of student debt, is simply not sustainable, not on an individual level, institutional or national level. To effect impactful transformation, those most vulnerable to the debt trap ought to be secured against it.

Education as a human right cannot be made the subject of bubble and burst economics. The point is not ideological as much as economic. Globally, technology development is outstripping the human capacity to create more work: the disconnect is felt in even the most controlled economic environments. For example, in China graduate unemployment has given rise to a “pretend to work” phenomenon. Graduates in desperation mimic employment so as not to become entirely invisible to the economy to which they seek to contribute. 

In South Africa, our data upholds the value of education in economic terms: we know that possession of a higher education qualification does provide youth a chance to secure employment more speedily than those with no qualification. 

The onset of the fourth industrial revolution and AI specifically pose threats to fields traditionally considered safe, such as accounting and medicine, meaning we need to rethink how we educate and train. It is obvious that development must be informed by values rather than only efficiency. While it is evident the world is not short of labour, it seems, at this time particularly, short of capital that is more accountable to people, in terms not only of what is owed and what can be repaid. Prospects of securing let alone creating work appear peripheral, and it is only education that can enhance those prospects.

While some argue that education has been narrowed to serving market-driven goals, others emphasise its deeper purpose: to nurture literate, critically engaged and creative citizens who can participate fully in democratic society. These opposing views often surface in debates on the so-called skills mismatch, yet overlook a fundamental truth that education throughout life is an essential part of being human. 

It is now widely accepted that primary education alone is insufficient, and even a first post-secondary qualification may not fully prepare individuals for the complexities of modern life. What is needed is a recognition that every effort to pursue education, at any stage of personal development, deserves support from the state, including a rethinking of how education is funded and made accessible.

This sounds idealistic. But, I ground this thinking in data about our reality in South Africa: an unemployed person who can access education and demonstrate success in achieving it, is a better economic prospect than a person who is neither employed nor engaged in any educational opportunity. Rates of unemployment among graduates show that students with a graduate qualification have a 16% chance of unemployment while those with a postgraduate qualification have a 6% chance. Simply put: the longer you study, the better your chances are of landing a job, or creating it.

Certainly, accountability for the use of public funding must be made more stringent, but higher education institutions cannot sustain student debt if they are to meet the aspirations of South Africa’s National Development Plan. Debt recovery only makes sense where an opportunity has been squandered. Ought we not focus on funding student success more, instead of focusing on debt relief? This is a better value proposition, which aligns with the fundamental premise of why we educate.

Past efforts to reverse or “recapitalise” debt (of which we have experience in South Africa) have not succeeded because they address symptoms of an inadequate approach, rather than the approach itself. There are a few reasons for this: writing off debt does not address historical disadvantage and makes some universities more precarious with regards to their future sustainability. 

Secondly, higher education funding models must be revised. The current formula seems designed more to control than to encourage considered growth; it stimulates research outputs, but cannot seem to account for declining rates of throughput. Quality of research and teaching is placed at risk. Our economy does not benefit from a sector which re-creates elites or encourages debt to grow. This view only makes sense if we accept the logic of privilege, which holds that the best can only be had by the few.

If we are truly committed to expanding access to education, we must recognise that every person deserves the highest-quality learning opportunities available.

If we are truly committed to expanding access to education, we must recognise that every person deserves the highest-quality learning opportunities available. This includes opportunities that empower individuals to confront, navigate and thrive amid the complex challenges facing our planet, our resources and our societies. The need for better education, not simply as a skills-to-market match for the economy, is a lifelong necessity in times of national and global crisis. 

The government and industry ought at this point to be rushing to fill the gaps, because not to do this is to deepen the educational and economic catastrophe many see as a normal function of the global and national economy. 

Understanding how to grow education is as important as understanding, for example, how to better thwart violence: the more we fund the means to violence (through weapons), the more we stimulate the economy to reward violence as a normalised course for intervention. Similarly then, rewarding and advancing education as a common good rather than commodity, depends on stimulating and encouraging its growth.

We understand well by now, how historical legacy can be made to live onwards. I therefore find myself asking both our government and our private sector not so much why these catastrophes continue to be our “normal” after 1994, but why we can’t address them better. DM

Professor Robert J Balfour is the rector and vice-chancellor of the University of the Western Cape.