Anthea Jeffery: The hidden costs of “free” university education - Biznews

Anthea Jeffery

The African National Congress (ANC), which continues to dominate the Government of National Unity (GNU) despite its reduced voter support, has long been determined to “massify” universities and provide “free” education for poor and working-class students.

However, with university completion rates generally poor and student debt steadily rising, it is time to ask what benefits these policies have brought.

A doubling in student numbers

Since 1994 the number of university students, including those at universities of technology, has almost doubled, rising from 575,000 in 1995 to close on 1.1 million in 2023. This is in keeping with the government’s long-standing drive, reflected in the 2013 White Paper for Post-School Education and Training, to increase student enrolment to 1.6 million by 2030. Fortunately, that target figure has recently been reduced, the cabinet resolving in mid-2026 to aim rather for 1.18 million students by 2030.

Already, however, the massification has often resulted in declining quality. The state’s subsidy to universities – low by international standards – has failed to keep pace with rising student numbers. Not enough additional lecture theatres have been provided, while the number of new academic staff appointed, at roughly 5,300 from 2005 to 2023, has been well below the increase in enrolments.

Worst of all, however, a mostly dysfunctional schooling system is still largely failing to equip students for the rigours of university study. Completion rates are dismal, with only 16.5% of students on average graduating with a three-year undergraduate degree within three years (the “regulation period”). Completion rates within regulation periods for three-year under-graduate degrees in STEM fields are particularly worrying. In 2023, they stood at 15% in physical sciences, 16% in computer and information sciences, 19% in engineering, and 11% in mathematics and statistics. Not surprisingly, many students thus drop out after some years without ever obtaining a qualification.

“Free” university education for the poor

Instead of trying to overcome these complex challenges, the government has focused on providing “free” university education to all poor and working-class students. In 2016 – largely in response to increasingly violent #FeesMustFall protests that cost universities some R800 million in damage to property – President Jacob Zuma appointed a commission of inquiry into the funding of tertiary education. This was chaired by Judge Arthur Heher and reported in 2017.

The Heher commission concluded that the government could not afford “free” university study, but Zuma ignored its views. Instead, the president used the ANC’s national congress in December 2017 to announce the introduction of “free” education for all university students with maximum family incomes of R350,000 a year. (This ceiling was substantially higher than the R122,000 limit applicable to the student loans the state was then providing.)

In addition, said Zuma, this funding would in future take the form of a 100% grant for all university expenses – including accommodation, subsistence, books and laptops – rather than a loan to be repaid. The new funding scheme was precisely what the Heher commission had warned against, saying the fiscus could not afford it.

The National Treasury had made no provision for this unexpected spending increase. In 2018 some R57 billion was nevertheless allocated to “free” university education over the next three years. Much of the additional revenue was obtained by raising the VAT rate by one percentage point, thereby obliging the poor to help pay for the fee-free education of the relative elite.

The National Student Financial Aid Scheme (NSFAS) took on the task of administering the new scheme. However, it lacked the capacity to manage the transition. ICT systems failed, irregular spending rose sharply, and the great majority of students went unpaid for eight months, causing them great hardship and badly disrupting universities. NSFAS was thus placed under administration in August 2018. As the administrator, Dr Randall Carolissen, was later to write, “nobody had anticipated the degree of the dysfunctionality of NSFAS or the pervasiveness of maladministration and the great rot that had ensconced itself in the system.”

NSFAS failures and rising student debt

Though NSFAS emerged from administration in 2020, further malfeasance soon became apparent. In October 2023 a report by Werksmans Attorneys found that NSFAS had irregularly contracted with four costly and inexperienced companies to pay students their allowances for accommodation, food, laptops and books. (Tuition fees were not in issue here, as NSFAS paid these directly to universities.)

Acting on Werksman’s recommendations, NSFAS cancelled these contracts and fired its CEO, Andile Nongogo, who had improperly influenced the selection of the four. Soon NSFAS was so dysfunctional that it had to be placed under administration again in April 2024.

NSFAS remained under administration until February 2025, when a new board was appointed. According to its new acting CEO, Waseem Carrim, the funding body had “a R39-billion allocation for the university sector” and had dispensed some R29 billion of this. It nevertheless faced a budget shortfall of about R10.6 billion, stemming largely from inflation and increased student demand.

In addition, said Carrim, NSFAS was owed R45 billion by students who had signed loan agreements before 2018, many of whom had since graduated and were now earning. These students needed to “pay back their debt” to NSFAS, so that the outstanding sum could be “re-utilised to fund new up-and-coming students.”

By March 2026 the total amount owed to NSFAS by some 824,000 former students (for loans received between 2011 and 2017) stood at R49.5bn. NSFAS had done little to recover this massive sum, even though 551,200 of these former students, or two thirds of the total, had jobs and salaries, often in the public sector.

NSFAS inefficiency has clearly inhibited debt recovery. So, too, has the ANC’s shift to “free” education, which has discouraged former loan recipients from repaying. Since most of this debt has remained unpaid for more than ten years, NSFAS is unlikely ever to recover it – and regards 98% of it as “impaired and non-performing.”

Other governance failures have persisted. NSFAS received a “disclaimer” from the auditor-general for its 2024/25 annual report, this being the most adverse audit outcome. It meant (as NSFAS acknowledged in a subsequent “audit recovery plan”) that its “financial records were so deficient and unreliable that the Auditor-General was unable to obtain sufficient evidence to form an opinion on [its] financial health.”

Evidence of possible fraud emerged as well. The Special Investigating Unit (SIU) was called in to recover some R1.7 billion in misallocated funds from universities, TVET colleges and former students. In addition, as Professor Marthinus van Staden of the School of Law at Wits University was later to write, NSFAS reportedly “allocated…more than R5 billion to unqualified students, while R260 million flowed monthly to about 158,000 ‘ghost students’.”

In August 2026 an interim report on NSFAS by the Public Protector said that more than 40,000 students at 76 higher education institutions – including many Technical and Vocational Education and Training or TVET colleges – had been improperly funded to an estimated value of R5.1-billion. (Of this, more than R2-billion has been recovered.)

NSFAS under administration again in 2026

In May 2026 the minister of higher education and training, Buti Manamela, placed NSFAS under administration once again, for the third time in eight years. Again, however, this seemed merely to add to the dysfunction and “great rot” that Carollisen had earlier flagged.

According to Delmaine Christians, DA spokesperson on higher education and training, the administrator appointed – at an annual salary of some R5 million – was Professor Hlengani Mathebula. His appointment overlooked a warning by a commission of inquiry, chaired by Judge Robert Nugent, that Prof Mathebula had “lacked the vigilance” expected of a senior official when he worked at the South African Revenue Service under Commissioner Tom Moyane. Moreover, once appointed as administrator, Prof Hlengani had gone on to appoint four advisers, who soon reportedly demanded almost R500,000 in fees. Meanwhile, tens of thousands of students were increasingly desperate to receive the NSFAS payments they needed for accommodation, food, and books. (On 14 August 2026, the Pretoria High Court issued an interim order suspending the appointment of the administrator and reinstating the NSFAS board, pending a full review of Prof Mathebula’s appointment.)

Universities have also suffered from NSFAS inefficiency. In August 2026 various universities complained that NSFAS’s failure to pay them some R10.2bn in current student tuition fees was making it difficult for them to pay salaries, sustain teaching operations, or provide academic support and other services for students. The amounts owing included R1.2bn to North West University, R700 million to Stellenbosch University, R634 million to the Cape Peninsula University of Technology, and R395 million to the University of Pretoria.

The University of Johannesburg said it had received only 20% of the tuition fees due to it in 2026. “The delayed payments,’ it went on, “were placing pressure on the university’s financial planning, while also creating uncertainty for funded students where outstanding balances remain reflected on their accounts.”

In addition, unpaid student debt is preventing tens of thousands of former students, who have completed their courses, from obtaining the certificates necessary to confirm this. In May 2026 the Department of Higher Education and Training (DHET) told Parliament that “165,000 qualification certificates” were being withheld because of student debt. Universities South Africa (USAF) put this total even higher, at some 188,200. By then, overall student debt across all tertiary institutions was reported to have risen to R59 billion, of which NSFAS-funded students accounted for R29 billion or almost half. (The DHET said it had obtained a legal opinion confirming that universities have a legitimate right to recover the money owed to them. However, the public protector’s interim report has criticised the withholding of certificates and urged the adoption of “a less prejudicial approach to debt recovery.”)

 An over-emphasis on university education

With “free” university education becoming ever more unaffordable for an overburdened fiscus – and many students dropping out after many years of fruitless study – the time has come for the ANC to stop portraying university education as the only prestigious option for young South Africans to pursue.

University education is constantly held out as the key to “dignity, upward mobility and participation in the post-apartheid middle class,” writes Peter Swanepoel, a historian and author (he is a regular contributor to the Daily Friend) affiliated with the University of Johannesburg’s History Department. In keeping with this fixation, he adds, “schools celebrate bachelor passes above all else. Politicians announce rising enrolment figures as evidence of progress [and] parents push children toward degrees.”

However, this emphasis harms the great majority of students, who arrive on campuses “underprepared in literacy, numeracy, writing and analytical skills after years in deeply dysfunctional educational environments.” As a result, many fail to graduate within regulation time, while “substantial numbers never graduate at all.”

This has devastating consequences for hundreds of thousands of young people. Notes Swanepoel: “Students spend years pursuing qualifications, often accumulating debt or consuming NSFAS funding, only to leave institutions without degrees, without technical skills and without having entered the labour market early enough to build meaningful practical experience elsewhere.”

The ANC’s long-standing drive towards massification has put enormous pressures on universities too. As Swanepoel points out, these institutions are “expected to absorb growing enrolments, compensate for failures produced much earlier in the educational pipeline and still produce employable graduates in an economy unable to generate enough skilled work”.

Note: This material is mostly drawn from the IRR’s latest Blueprint for Growth paper, released on 18 August 2026. This paper deals with the jobs and skills vital to growth and individual upward mobility. Jeffery will examine possible solutions to the high costs of free university education in these pages next week.

Dr Anthea Jeffery holds law degrees from Wits, Cambridge and London universities, and is the Head of Policy Research at the IRR. She has authored 12 books, including Countdown to Socialism - The National Democratic Revolution in South Africa since 1994, People’s War: New Light on the Struggle for South Africa and BEE: Helping or Hurting? She has also written extensively on property rights, land reform, the mining sector, the proposed National Health Insurance (NHI) system, and a growth-focused alternative to BEE.

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This article was first published on the Daily Friend.