Students From Higher Income Families Should Pay More – Max Price


While the SA education department still struggle with financial aid for all SA universities, the Vice Chancellor of the University of Cape Town, Max Price believes students from higher income families should bear the burden by paying higher fees.

Max Price in his open letter to colleagues, students and alumni noted that tertiary institutions can only come out of its financial debts only when an 8% increase (about 2 percentage points higher than inflation) in revenue is made.

He said this is so because salary bill is going up above inflation, “including the costs of in-sourcing, cost of certain services such as electricity (R76 million of our budget) and other utilities are increasing at nearly 10%, and all our imported purchases have been escalating at double-digit rates due to the weakening exchange rate. In short, we need an 8% increase in revenue if we are to conduct our activities at the same level in 2017 as we have in 2016.”

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Hence, after much deliberations between various universities in SA and the education department, it is obvious that SA government would not be able to foot the financial bills of all institutions.

According to Max Price, universities would certainly prefer the majority of the 8% revenue increase, if not all of it, to come from government, in recognition that there has been a chronic under-funding of higher education, which has resulted in the fees being increased over a number of years to what are unaffordable levels for many.

But for the difficulty in the present economic situation, the risks of credit rating agency downgrades and the competing needs for public funding, universities turn to other means for the much needed finance.

“The student movements have proclaimed that they will not accept fee increases and have threatened to shut down the universities if fees are increased. This is argued on two grounds. First, university fees remain unaffordable, particularly to the missing middle who are not covered by the National Student Financial Aid Scheme”

Adding, he said “Second, it is argued that there should be a moratorium on fee increases while the Presidential Commission is considering a major review of policy, which could lead to reduced fees.”

Max Price therefore suggest that on affordability, government should find the full shortfall and fees should be kept at their current level without doing too much damage to the economy and other government programmes.

If not,“keep the fee at the same level for students from households earning below, say, R500,000 per annum, and allow universities to increase fees in real terms for students from higher-income households above that threshold

“There is no good reason why wealthy students should benefit from reducing real fees for a further year (in other words, when fees do not adjust with inflation, they become cheaper in real terms, since salaries go up at least with inflation, as do all other expenditure of a household,) he said.

Max further warned that the consequence of not adjusting fees for inflation for higher-income families is that the higher education system could lose revenue which could be used not only to improve education quality but also to cross-subsidize poorer students.

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“Remember that our financial aid does not only cover tuition fees: students also have to pay for accommodation, food, books etc. Whatever happens to tuition fees, those other costs go up, and so financial aid must increase to ensure that affordability for those students is maintained” he said

Max maintained that universities would not sustain zero fee increases for three years in the absence of further allocations from the public coffers. By 2019, the state would have to be contributing an additional R8-10 billion annually to replace the lost inflation adjustments to fees.

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