Free education in S.A, fact or fallacy

South Africa's National Treasury recently committed an additional R16 billion towards higher education in the next three years, aiming to make education more accessible. However, the question of who will ultimately bear the financial burden remains a critical issue. In a recent interview with CNBC Africa, Co-Pierre Georg, Senior Lecturer at the African Institute of Financial Markets and Risk Management, provided insights into the payment framework for free education in South Africa. Georg highlighted that currently, universities in South Africa cost the country between 50 and 60 billion rand annually. These costs are primarily covered by government subsidies, fee revenue from students, and some income from third-party donors. The declining government subsidies have led to universities relying more heavily on fee revenue, exacerbating the financial pressure on students. This financial strain has sparked protests across campuses, underscoring the urgent need for a sustainable funding model. Georg proposed a tax-funded model to finance free higher education in South Africa. With the country's annual tax revenue at around a trillion rand, he suggested allocating an additional 30 billion rand for education. This funding could be sourced from a combination of increased personal income tax, a slight raise in value-added tax (VAT) to align with international standards, and a nominal increase in either corporate tax or an education levy. One of the key challenges in achieving free education is the cost-sharing structure, particularly the National Student Financial Aid System (NSFAS). Georg pointed out that NSFAS has been underfunded due to the growing number of students seeking assistance, leading to a backlog in financing. He expressed skepticism about the effectiveness of a loan-based system like NSFAS, highlighting its inherent flaws in excluding students from disadvantaged backgrounds due to credit risk screening. Moreover, Georg addressed concerns about a potential backlash from affluent individuals regarding increased personal income tax. He emphasized the importance of addressing inequality in South Africa and the need for a moderate tax increase to support free education. By investing in education, Georg argues, the country can empower young South Africans to break the cycle of poverty and bridge the existing skills gap, ultimately fostering economic growth. In conclusion, Georg underscored the importance of reevaluating the existing financial framework for education in South Africa to ensure equitable access to quality higher education. By implementing a tax-funded model and addressing the limitations of NSFAS, the country can strive towards a more inclusive and sustainable educational system.