By Sara Gon
Dr. Max Price, Vice-Chancellor of the University of Cape Town has recently (28 August) released his regular letter to students and staff, “From the VC’s Desk”, to explain the university’s current position on fee increases, ahead of an announcement by the Minister of Higher Education.
Price and his management have once again displayed their financial illiteracy. Price displays a lack of understanding of the amounts “higher earning” households have already contributed to the cost of education through taxation.
Price also says that the private sector “should” contribute to education – not just the government. This emphasises his understanding of taxation: government’s money is private sector money that is managed (generally badly) by government.
Second, the attitude to asking the private sector to contribute should be more contrite and be less a moralistic demand that the private sector “should” contribute. Why should it? The private sector needs to approach with more respect to ask to contribute.
Price must understand that when people pay money for something they are entitled to something in return. This may well be that the university put an end to the untenable cost of insourcing. Price himself includes the cost of insourcing as something that is stressing university budgets.
Price makes the suggestion that shows that his university doesn’t actually deserve support from the private sector.
“Then UCT has suggested the following compromise: 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). The consequence of not adjusting fees for inflation for higher-income families is that the higher education system loses revenue which could be used not only to improve education quality but also to cross-subsidise poorer students. 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.”
UCT has no right to obtain information about what a household earns. It has no right to determine who in or outside a household pays the fees. Why should a “higher income” household, which agrees to pay for the university fees of the child of a domestic worker, be obliged to pay higher fees because that household is richer?
What if some members of the household do not support the payment of a child’s school fees?
What if “higher earning” parents believe a child has to pay their own way through university either through working for it or obtaining a bursary?
That UCT cannot see how inappropriate and unfeasible such an approach is, is worrying and raises the question as to whether the university deserves and will continue to receive support from the “wealthier households”?
Why doesn’t UCT deal with it the other way round? Do what fee-paying public schools do – set a fee and then invite application for part or full subsidies from students? Some will be entitled to National Student Financial Aid Scheme government bursaries anyway. Some will be entitled to a reduction of fees proportional to the income of the person paying the fees.
The advantage with this system is that one fee is set and it is for the student and his or her funders to apply for exemption, and provide the information required to qualify.
Why does UCT never get it right?
Sara is a Policy Fellow at the IRR, a think tank that promotes economic and political liberty. Follow the IRR on Twitter @IRR_SouthAfrica.
Read the column on BizNews here.
