Survival of universities requires realism on fees

17 July 2016 - 02:00 By ADAM HABIB AND AHMED BAWA

Allowing higher education to collapse over funding will have dire consequences We are in the throes of an intellectual and political struggle for the soul of South Africa's future.This is not the struggle that is being fought on the campaign trail for the August 3 elections, yet when the dust settles it will probably have a far greater impact on our society than the rough and tumble of choosing mayors and councillors.It is the struggle around the financing of higher education, and it is being waged in the corridors of our universities, in the flamboyance and rhetoric of student politics, and in submissions to the presidential commission on free education and the ministerial commission on a fee regime.It can be difficult to make sense of this debate given its rhetorical flair and ideological fervour, but essentially it has three strands.story_article_left1The first makes the case for free higher education and is perhaps most coherently summarised by Rasigan Maharajh, Enver Motala, Leanne Naidoo and Salim Vally in the online journal The Conversation and in their submission to the presidential commission. Essentially, this view holds that free higher education should be underwritten by a tax on the rich.This recommendation could be more effective than the one advocated by some vice-chancellors who propose a higher fee on rich students to cross-subsidise students from poor communities. A tax would be a more effective way to get the rich to pay, not only because of its administrative efficiencies, but also because it would capture a wider range of the rich.But here is the challenge to the free education paradigm. While taxing the rich to underwrite higher education is a far more efficient option in policy terms, is it politically feasible?First, there is a serious trust deficit in the state, which means that the rich will engage in tax avoidance. Second, we are not sure the state has the political will to implement significant tax increases. Sections of the political elite are concerned that it may chase away investment in a world where capital has never been so mobile.Finally, we do not believe the state can afford a significant tax increase now, when economic growth is almost stagnant and there are multiple other legitimate demands on the public purse.In this context, should higher education executives not be prudent and have a Plan B? Some bristle at this suggestion for they assume it is a means to deflect from the free education option. They raise the possibility of social mobilisation by students, and remind us of what we have often said since the protests in October last year - that the students achieved more in 10 days than vice-chancellors achieved in 10 years.block_quotes_start Social change has to happen within its context, and not in an idealised fantasy world block_quotes_endThis is entirely true and points to the power of social mobilisation. But recognising this power must not lead one to fetishise it.Protests often succeed when they take the form of short spontaneous bursts, which must then be capitalised upon by astute leaders who drive through sustainable change.But this requires political nuance and an understanding of trade-offs. What is often not understood about last year's protests is that while students did indeed force the state to make available resources for a freeze on fees, the costs were borne by marginalised communities whose social support programmes were cut.Unintended consequences can arise from social action. This does not mean action must not be undertaken, but it does require that social mobilisation must not be romanticised. Moreover, it should be accompanied by thoughtful activism.story_article_right2Here is the danger of a misreading of the political moment or an adventurist display of social action. State elites could very well concede the demand, but as on the rest of the continent, they might fail to make available the resources for their populist concession. The net effect will be - as it has been in other African societies - the immediate collapse of quality higher education.We are aware that some have suggested we must implode higher education, and only then can we rebuild it from the ashes.But such individuals have never built anything worth a damn. Moreover, many of these people, who we have cynically called "members of the Pol Pot brigade", will not have to pay the costs of the collapse of universities. Often, they already have their degrees, their children are in private schools, and they carry second passports.The consequences of these choices will ultimately be borne by future generations of students, and society as a whole, because of the entrenchment of inequalities that would likely flow from the collapse of public higher education.It is the prospect of this outcome that has galvanised the two other strands in this debate.The first, advocated largely by government officials and even some associated with the ministerial commission on a fee regime, makes the case for a consumer price index increase in university fees.They recognise that costs within universities increase beyond CPI. What is referred to as higher education inflation occurs because a portion of a university's costs - library books and journals, high-level research equipment, collaborative research costs - is heavily dependent on exchange rates. Estimates from Universities South Africa and even the ministerial commission suggest this inflation is up to 2% higher than CPI.Despite this, and recognising the adverse economic circumstances we are all embroiled in, these individuals advocate the compromise of a CPI increase.block_quotes_start The consequences of these choices will ultimately be borne by future generations of students and society as a whole block_quotes_endThe hope is that this compromise would avoid a new round of student protests, but this is unlikely.Social struggles are not a result of rational processes. They are a product of interests and power, and no rational engagement about evidence is going to prevent protests .It should be remembered that the constituency that has led the student protests is essentially the "missing middle" - students whose parents, mostly upper-working class and lower-middle class, earn too much to qualify for state funding . Research modelling the impact of a CPI increase shows it would adversely affect the traditional and comprehensive universities in the metropolitan areas, the very institutions where the missing middle is located.Just as importantly, many universities' decisions to insource vulnerable workers has added 3% to 4% to expenditure, which means that costs in many urban universities are increasing at 12%.full_story_image_hright1In this context, a simple CPI increase would be about 6% below real cost increases. The research that models the impact of a CPI increase also shows that if insourcing costs are included, 15 out of a sample of 21 universities would be financially worse off - a dramatic blow with severe consequences for the quality of the one functioning higher education system in Africa.The final strand therefore insists that the fee increase should be higher education inflation at a minimum. This could be done by sharing the obligation, with student fees accounting for a portion and the difference being made up by a separate state grant. But how are students to afford this?We may have to use the banking system. Sizwe Nxasana, chairman of the National Student Financial Aid Scheme and the previous CEO of FNB, is working on a model to fund primarily the missing middle by using a mixture of government guarantees, social responsibility bonds and other financing mechanisms. This could be adapted with academics Daniel Bradlow and Eddie Webster's ideas of a perpetual bond (which has no maturity date) tied to retirement options which is more cost-effective from the students' perspective.story_article_left3This is not the best scenario for it would entail students graduating with debt. Moreover, it could further consolidate inequality.But it does address our immediate challenge, which is to enable access to university education for all who qualify.We are in a moment where we have to choose between unpalatable options. We wish this were not the case, but social change has to happen within its context, and not in an idealised fantasy world. Our responsibility is not to avoid making a decision, but to make the decision that is least offensive. This decision need not be permanent. It can simply be a choice to enable both some progress and the continuation of the greater fight.This is, after all, how most social change happens. Systemic and societal transformations do not happen in a single moment. If anything, they result from the accumulation of smaller social reforms that then collectively transform our society.But this requires political nuance and integrity from our leaders. Without these, we risk unintended consequences that could cripple our societies. Some factions of the current cohort of student activists have accused Nelson Mandela and his generation of having sold out and compromised on the principle of socioeconomic inclusion.Is it not ironic that they risk doing the same by pursuing maximalist demands that could effectively destroy the very foundation of quality higher education in South Africa? Now, more than ever, there is a need for a thoughtful activism.Habib and Bawa are chairman and CEO, respectively, of Universities South Africa

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