The stated ambition of the National Development Plan is to increase enrolment in higher education institutions by 70%, to more than 1.6million, within 15 years. But the cost of education, which has sparked student protests across South Africa, could threaten the government's plans if funding challenges are not addressed.The vice-chancellor of the University of the Witwatersrand, Adam Habib, said a decline in government subsidies had led to most universities needing to increase fees in a bid to not compromise the quality of education.President Jacob Zuma announced on Friday that there would be no increase to next year's fees, which leaves both the state and universities scrambling for additional funding.In an interview with Business Times, Finance Minister Nhlanhla Nene said if the government were to invest more money in higher education, the funds would have to be found through "a game of trade-offs" in which other priorities "would have to take a back seat".story_article_left1Nene said there were processes under way to look at the issue of education - an interdepartmental structure and a presidential team involving outside stakeholders, which had been due to deliver a report in April next year. "We might have to expedite that now," he said.Nene said he did not think that free education was possible at this stage.Diana Parker, a deputy director-general in the Department of Higher Education and Training, said public financing of higher education had dropped by 30% in the past decade.Habib agreed that an increase in fees would be an "unfair burden" on students, saying: "I've been saying for a while [that] we are heading for a disaster, we are heading for a perfect storm and we need to think this through."According to Linda Jarvis, the chief financial officer at Wits, there were three main sources of funding for universities: the state, fees and private contributors.Jarvis said the state used to contribute a lot more than students, but Wits had seen a switch with the government contributing about R1.1-billion last year compared with the R1.2-billion paid by students.The government has used the National Student Financial Aid Scheme to provide funding to students, but it has been unable to carry the heavy burden.The scheme's debt recovery from graduates declined to R247.5-million in 2015 from R338.8-million in 2014 and it battles to get millions of rands in debt back from employed graduates, partly as a result of inefficiencies. The recovery of debt is crucial to funding a broader pool of students.The scheme, which has advanced about R50-billion in loans and bursaries to about 1.5million students since 1991, has done its bit and would continue to do so, said Lesiba Mothata, an economist at Investment Solutions."The situation which is at the root of the problem is that South Africa right now is in a recessionary condition. It's no coincidence that students are rioting, because the value chain is that if your mother or father is working and then gets retrenched, it decreases your ability to be able to pay," he said.Mothata dismissed the call for free higher education, saying that 100% free education "doesn't happen anywhere in the world. To have quality education, we need some contribution that comes from the household."He said universities had to deal with the rising cost of maintenance, electricity, importing goods and buying computers and other equipment.The national funding scheme caters only for students with a total annual household income of up to R120,000. Th ose students with parents earning above the threshold are left out of the system.Other education lenders include Eduloan and the country's major banks - Standard Bank, Barclays Africa, Nedbank and First National Bank.The banks declined to disclose how much they had advanced in student loans.They offer loans that cover tuition, accommodation, books and academic equipment and allow for the capital outstanding to be paid after completion of studies.But unlike the national funding scheme, the interest and fees from the loans have to be serviced while the student is pursuing his or her studies. This restricts bank loans to those students who have parents, guardians or sponsors who are able to meet these costs during the period of study."We are currently looking at ways of redesigning our traditional approach to student financing in order to accommodate more students," a Standard Bank spokesperson said.Standard Bank said repayment of the capital began six months after the students finished studying, and ran for up to five years.Underscoring the need to broaden funding to accommodate more students, Pieter du Toit, FNB's CEO of personal loans, said that over the past year, about 3,000 students had benefited from the bank's education lending products.story_article_right2He said 23,000 people had taken student loans from the bank over the past decade. To qualify, the person taking on the debt needed to be employed and earn at least R6,000 a month.Standard Bank said it had lent to more than 40,000 students over the past five years. Nedbank said the numbers were difficult to quantify as it had been providing student loans "over a number of years". Absa said it had about 30000 students using its lending facility.These figures pale in comparison to the national funding scheme, whose most recent annual report shows R9-billion was disbursed in 2014-2015 to 41,4802 beneficiaries.About R7-billion of the loans went to students at universities and the remainder to those at technical vocational education and training institutions.Vanesha Palani, the head of transactional product at Nedbank, said one of the challenges with funding tertiary education was the increasing cost of tuition, which made affordability of loans difficult.Palani said banks also had to consider what position a student would find themselves in after completing their studies, given the levels of debt in South Africa.With limited student lending, the banks have tried to redeem themselves by offering bursaries - but the programmes, run by all the banks, do not make enough of a dent.Habib said if the government wanted to meet the 2030 target, there would have to be "much more dramatic" investment in higher education - and an improved performance from universities. - Additional reporting by Mariam Isamtonganal@sundaytimes.co.za, tshandup@sundaytimes.co.za, ndzamelap@bdfm.co.za..