The first brief in this series discussed the extent and cost of the unrest in universities. The second described the economic and fiscal context within which university and student financing has to be considered. This brief deals with the prospects for resolution.
The following factors should be borne in mind when thinking about the prospects for resolution:
1. The pattern and growth of enrolments.  Table 1 sets out the number of students enrolled in universities since 2010.  
Table 1 - Student enrolments, 2010 to 2015
Source:  Higher Education Statistics 2014 and October 2016 MTBPS Higher Education Vote
Note:  The 2015 estimate is preliminary
The estimates indicate that student enrolment in public universities grew by an average of 2.0% per year between 2010 and 2015.  Forty percent of students enrolled in public universities are distance students who do most or all of their studying away from universities.  Contact students attend all their classes on campus.  Enrolment at private universities has grown much more rapidly than enrolment in public universities.  
Many students in public universities are employed and studying part time, as Table 2 indicates.  Tuition fees paid by these students are on average lower than those paid by other students since the number of courses taken per year are generally lower.  Table 2 indicates that some contact students are employed as well.
Table 2 - Student enrolment by employment status, 2011
Source:   Population Census 2011, 10% sample
2. The full cost of study.  There is a distinction to be made between tuition fees (including registration fees and other costs of tuition, such as class notes fees or laboratory fees) and the full cost of study, calculated by each university.  The full cost of study includes an estimate of the costs of tuition fees, accommodation, meals and books.  Like tuition fees, the full cost of study varies considerably across universities.
The demand for ‘fee free’ education is therefore ambiguous.  It can refer to either tuition fees or the full cost of study.  It is also not clear how the full cost of study should be calculated for employed students.
3. Income distribution.  There is currently controversy over whether there should be differential treatment for students from poor, middle and affluent households.  Some proposals are for fee free education for all students.  Others are for fee free education for students from poor households (household income less than R 150 000 per annum), fee support on a sliding scale for the ‘missing middle’ (household income between R 150 000 and R 600 000 per annum) and full fees for students from affluent households.
It is therefore desirable to estimate the distribution of households with at least one student across these three categories.  This distribution is not the same as the distribution of all households.  Other things equal, a higher household income will improve the prospect of gaining a National Senior Certificate pass at the degree or diploma level and entrance into universities.  
The available data for making these estimates are not accurate and suffer from small sample size.  Table 3 sets out estimates for the anticipated household income distribution in 2017 for all households, households with contact students at public universities, households with distance students at public universities and households with either contact or distance students at public universities.
As can be seen from Table 3, the effect of income on entrance to universities is very great.  The average income of households with at least one contact student is over three times the average income of households with no income, and the average income of households with at least one distance student is two and a half times as great.  
Table 3 - Household income distribution
Source:  Own calculations based on the 2015 General Household Survey
In the light of Table 3, one may ask: is the demand for ‘decommodified education’ (i.e. free across the board) related to the fact that over a third of contact students come from affluent households?
Free education across the board would involve replacement of 100% of fees.  Fee support on a graduated basis would involve replacement of 50% of fees (31% plus half of 38%).  
4. The balance between the block and earmarked grants to universities, on the one hand, and the growth in student numbers, on the other is going to need attention.
There is controversy over the basis for inflation adjusting university subsidies.  One option is to use the Consumer Price Index.  Based on a commissioned study, the universities have been arguing that the CPI under estimates inflation.  The study produced a Higher Education Price Index and found that it has increased by 7.5% in 2013, compared with a CPI increase of 5.7%.  On that basis, the universities are assuming that this disparity will last indefinitely.  It was the basis of their application for an 8% fee increase in 2017.  
But will the HEPI always outstrip the CPI by this margin?  It seems unlikely, especially since staff remuneration constitutes nearly 60% of university costs, so that an index of unit labour costs will be the main determinant.  One would expect staff remuneration to rise in accordance with unit labour costs outside manufacturing, and so adjustment using this index is a third option.
Figure 1 displays indices of the real value of university subsidies (excluding fee replacement) for the three deflators:  CPI, HEPI and unit labour costs.  Two conclusions can be drawn:
i. The widening gap between the HEPI and unit labour costs renders the projection of a HEPI permanently 1.8% above CPI implausible.
ii. On whatever basis one adjusts for inflation, a gap has opened up between the student number index and the real university subsidy index.  That puts increasing financial pressure on the universities and it cannot continue indefinitely.  Either the increase in students will have to slow below 2% per annum, or the university subsidies will have to increase. 
5. Modelling.  There have been various attempts at modelling the effects of different proposals.  Most of these are not worth the paper they are written on, since much of the necessary information is not in the public domain.  An exception is the modelling work done by the Treasury in preparation for its submission to the Heher Commission.  It found, on reasonable assumptions that over a three year period (2017/18 to 2019/20), the additional cost of a no fee policy introduced in 2017 would be R 71 billion.
6. NSFAS reform.  Efforts are being made to draw the private sector more fully into NSFAS, both through grants and loans.  Recovery of loans is also being pursued with more vigour.  Precisely what can be achieved remains to be seen.  It should be noted that NSFAS loans already have a large grant element.  Consider the case of a full time Bachelor of Arts student who passes all her courses the first time round.  She qualifies for a rebate of 40% of the loan advanced in her first and second years and 100% rebate in her third year.  She then has a year’s grace period and faces a rate of interest well below the rate for 10 year treasury bills.  Assuming she repays over ten years, the net present value of repayments is only about a quarter of the net present value of the advances.  
Nongqawuse said that: ‘There would rise cattle, horses, sheep, goats, dogs and fowls and every other animal that as wanted and all clothes and everything they could wish for to eat, and all kinds of things for their houses should come out of the ground[1].  Not as it turned out, and not in this case either.
Three principles should govern the way forward:
1. While students have the right to protest and to represent their views to departments, schools, faculties and administration within the universities and to the government, harm to people and damage to property makes problems worse rather than better.  It also exposes the perpetrators to disciplinary action and criminal prosecution.  Actions have consequences.
2. Reforms to student and university finance cannot be settled on the barricades, and they cannot be settled on the basis of hastily run up models.  They have to be worked out carefully and calmly, within tight budget constraints.
3. What ‘decolonised education’ means will have to be worked out discipline by discipline and university by university.  There are procedures within each university for curriculum change which should ensure quality control.  Fashion should not trump academic depth.
It is not easy to be the first in a family to enter higher education.  Household income is likely to be lower than for other students and there is the strain of entering a new and different world.  Success will come to those determined to overcome difficulties, rather than to rock throwers and arsonists who know in September that the academic year is lost.
Charles Simkins
Head of Research

[1] J B Peires, The dead will arise, Ravan Press, 1989: p 80