Recent revelations that at least 40 000 students funded by the National Student Financial Aid Scheme (NSFAS) are considered “underserving” and may have submitted fraudulent or unconvincing evidence to prove their meeting the means test’s requirements are not surprising. While the current household-income-based financial means test applied by the NSFAS appears very good on paper, the socioeconomic conditions of a middle-income country like South Africa coupled with the history of decades of dispossession for the majority of South Africans dictate otherwise.
A financial means test based on a threshold-linked household income ignores the various contexts from which the students originate and South Africa’s unique history of segregated spatial development, asset ownership laws, and the abject poverty that most South African households find themselves in. For illustration, Statistics South Africa’s figures indicate that 43% of the working-age population is unemployed, but about half (52%) of all households depend on salaries as their main source of income while a further 10% rely on handouts from relatives. This is indicative of a proliferation of single-income households, with more mouths depending on a single income for survival. The unemployed members of salaried households and the poor relatives of working adults essentially survive on the very incomes that the current NSFAS methodology uses to exclude children who, in reality, need financial aid despite the superficial “middle income” status of their households.
Another factor which the current NSFAS threshold-based means test ignores completely is household size. The Statistician-General, Mr Risenga Maluleke, pointed to the average household size in South Africa being three (3) members when releasing the results of the General Household Survey last year, the results of this survey further indicated that about 41% of all households have four (4) or more members. These households do not often conform to the traditional Western definition of two parents and dependent children. They often comprise unemployed uncles and aunts living together with their aged parents and children in a single household. Ignoring the question of household size in a middle-income, high unemployment context like South Africa is tantamount to financial genocide for households that rely on single incomes that are above the current threshold of R350 000 and households headed by previously disadvantaged persons who are considered too rich for a government-subsidised house and have to let go of 30-40% of this income to access shelter and basic services.
As such, for as long as the current threshold-linked means test is in place as the sole arbiter for access to higher education, students from households that are bigger but earning above the threshold would continue to find creative ways to access education, the annual protests by students against financial exclusion across various universities would continue and the rate of youth not in employment, education and training (the so-called NEET) would remain unsustainably high (currently at 43%).
Uniformly, a majority of the so-called middle-income earners would continue to live a life of abject poverty coupled with increasing debt-dependency as soon as a member of their household who may not even be their natural child enters higher education. This specific group of our population appears to be the most unfortunate – they are taxed exorbitantly to fund those considered low-income earners and their dependents in education, health care, basic services, and housing, yet they can barely afford all these services for themselves despite being excluded from fully subsided services on the account of being considered too rich.
However, to their credit, following sentiments against the household-income-based means testing in various fora over the years including the 2010 Ministerial Review Committee and the 2016 Fees Commission, the NSFAS has undertaken various studies and implemented a lot of improvements in their assessment system. The current funding criteria include various factors such as “proxy testing” which then waives the need for means testing based on the quintile of the secondary school attended and whether applicants or their households receive social grants, with the rest of the applicants being subjected to means tests based on a hypothetical disposable income. However, this still ignores the so-called middle-income earners as households earning above the income threshold are automatically considered “not needy” and their dependents excluded.
This is untannable in the long term. The threshold should be done away with completely. All prospective students in need of financial aid should be eligible for funding by the NSFAS. However, based on household income certain students may be offered student loans instead of grants. For illustration, if the current threshold of R350 000 is to be sustained, it should only be for the purpose of determining the kind of funding to be extended to a student between a loan and a grant, not as the sole determiner of access to education.
While it could be argued that students from such households would be eligible for commercial bank student loans, this is often not the case due to either a lack of sufficient disposable income or over-indebtedness due to the factors such as household size indicated earlier in this article. Over-indebtedness affects more than half of credit-active South Africans, according to the Financial Sector Conduct Authority (FSCA). Furthermore, interventions that do not apply the same eligibility tests as banks, such as the Ikusasa Student Financial Aid Programme, also apply a threshold-linked household income means test as the most important criterion for eligibility.
As such, the national government, through the NSFAS, should consider a funding model that primarily relies on disposable income and considers factors such as household size and individual households’ cost of living. To ensure the sustainability of such a model, funding for “non-poor” students by current definitions should be structured as student loans, and proposals such as those of the African National Congress (ANC)’s Mangaung conference for a graduate tax should be considered to ensure the adequate funding of future students.
The current model, while giving an impression of good governance and financial sustainability for the NSFAS, is unsustainable for the country, as it essentially excludes dependents of “middle income” earners and creates a new form of inequality, where the mechanisms for redress are also apparatus of a new kind of oppression for the so-called middle-income earners.
*Madimetja Mashishi, CPRP is a Manager of Communication and Media at the South African Pharmacy Council and a chartered public relations practitioner, he writes in his personal capacity.