#FeesMustFall: A perfect financial storm, R12bn spent on drop-outs pa

The #FeesMustFall debate rages on following the relatively peaceful student protests which brought about the zero percent increase for next year. But the big question is what next? There are arguments for free tertiary education but who’s going to pay, and can South Africa afford it. Biznews community member Jodie Taylor sent in a response, which looks at the other side of the coin, where a greater problem is manifesting. Her concern lies with the current drop-out rate at the institutions, and the implications this will have on the whole system. Her calculations show the current 60% drop-out rate equates to a financial loss of R12 billion a year. Rhodes tax lecturer Matthew Lester, who has been searching for solutions to the #FeesMustFall saga, and his response to Jodie’s concerns are also in the article. It’s an interesting dicussion, and it’s got the people talking. – Stuart Lowman

By Jodie Taylor

The current situation seems to be focused on youth entry into tertiary education, with some interesting solutions proposed particularly by Matthew Lester. However there is the other side of the coin where a greater problem is manifesting.

Underlying the immediate financial challenges a far larger financial problem is embedded in the system that will undoubtedly arise in the near future and complicate matters further, both in the education, and political space.


This hidden problem is the current drop-out rate which has financial implications, that unless action is taken now to remedy it, will dissolve that part of the good work government has done in providing financial relief to the youth of our country.

Currently, South Africa has a drop-out rate of 60%+ translating into a financial loss calculated at R12bn a year for tertiary students.

Read also: Matthew Lester: #FeesMustFall – Widen tax exemption to R500k, benefits bountiful

Should government plans come to fruition in extending finance to what amounts to double the current intake at NSFAS, the hidden financial cost will more than likely double to some R24bn per year.

Although there are many reasons for drop-outs, there is a part solution that looks to the root cause of drop-outs that can be positively affected, and that is the current mismatching between individuals, and their subject, study and career choices.

This is clearly demonstrated in the Funza Lushaka Scheme where 32% of their teacher graduates never get to teach and makes up a sizable los topportunity. If you run some numbers on this, the very poor return on investment are startling.

Our work over the years at community level leads us to believe the perfect financial storm is yet to come and solving the adequate financial return on investment question will be the real challenge, failing which, the NSFAS system is likely to implode.

Read also: How to fix #feesmustfall dilemma – tap into Govt slush funds, don’t raise taxes

As an aside, we would like to help the country if you know of anyone in government who is solution-centered, and would like to receive some assistance.

For now it would be appreciated if you could perhaps use your platform to raise the issue and get it the attention it needs.

Response from Matthew Lester

I agree that #FeesMustFall is the tip of the iceberg. It is representative of years of neglect of all between the ages of 18 and 65 who get very little out of teh new RSA.

You are quite right about throughput and dropout rates. Although this has always been a problem with universities.

Read also: Matthew Lester: SETAs, UIF should be raided, then #FeesMustFall

There have been some success in the Funza Lushaka scheme and it is indeed very sad when anyone with a qualification is not deployed. `especially when it comes to teachers.

Perhaps a presidential commission of enquiry is needed. We cannot spend 23% of the taxpayers Rand on education and be left with such a mess.

Again, as I have mentioned in my columns I suggest that we need an education codesa. Lock them all up until have come up with solutions.

Unfortunately the problem is not only in education but in most other aspects of RSA today. the money is there, but delivery is the problem.

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