President Jacob Zuma has released the report looking into the plausibility of free tertiary education in South Africa.
The fees commission, which compiled the report, said that every student has the right to further education, and that the state has an obligation to make this progressively available and accessible.
However, the report cautioned that the state simply does not have the funds for free tertiary education across the board – and that doing so may not actually be in the best interests of South Africa’s higher education sector.
There was room to make Technical Vocational Education and Training (TVET) colleges fee-free, as well as to improve the current funding schemes for poor students in the country.
To this end, the commission recommended that a new cost-sharing model be introduced between the public and private sectors, which would take the form of an income contingent loan (ICL) made available by the private sector (banks) for the full cost of study.
Effectively this means that students will only be liable for loan repayments after they have begun working and their income meets a determined threshold.
The state will then purchase these loans (or guarantee them) and SARS will be responsible for collection as if they were any other tax. It is understood that government will therefore also be responsible for the shortfall should students not repay these loans.
Under this proposed scheme those who can afford to pay, must still pay, while the loans for students who cannot afford to pay (including the repayment rates and amounts) will be as low as possible.
It can then be extended to post-graduate students and those past students who were historically indebted at a later date. Application and registration fees would also be scrapped.
Backing the fund
As part of ensuring that the contingent loans receive sufficient financial stability, the report proposed a number of ways that these loans could be financially backed.
This includes long unclaimed pension fund benefits which would be subject to further guarantees of repayment should they be claimed at a later date.
Other proposals include the use of BBBEE points as funding, as well as the creation of an education fund funded by the private sector.
Should this ICL scheme go ahead, the commission said it would reduce a significant burden in the financing of student education, the benefits of which could then be used to provide subsidies.