“Growth in student numbers without matching growth in subsidy funding has resulted in general underfunding of higher education, putting pressure on institutions to raise funds through fees and third stream income,” Qonde told the commission investigating the possibility of free tertiary education.

“The net result is that university fees have become increasingly unaffordable to the working and lower middle classes.”

The Commission of Inquiry into Higher Education and Training was established in January to inquire into and make recommendations on the feasibility of fee-free higher education and training in South Africa. It began public hearings in Pretoria on Wednesday.

Qonde said at least five universities incurred operating deficits in 2014, and seven universities incurred operating deficits on their council-controlled funds in 2014.

Funding shortfall

For four of them it was for a second year running. One of them was in deficit for the third year in a row.

The financial situation was worsening and the system had been under financial stress before the protests against fee increases at tertiary institutions began in October 2015.

On October 23, following protests at tertiary institutions around the country during which millions of rands of damage was caused, President Jacob Zuma announced a 0% fee increase.

This left universities with a funding shortfall of about R3 billion.

“The effect of the 0% increase and the demand for insourcing of workers at universities are still to be quantified," said Qonde.

The financial sustainability of the sector as a whole was at risk and the situation was exacerbated by “significant student debt”, he said.

Student debt could increase again this year, meaning universities would struggle to meet their financial targets. After the protests, some institutions had asked banks for overdraft facilities.

“Universities report anecdotally that in the wake of the fees must fall campaign it is harder to recover fee payments from students, even wealthy students. Three universities have requested approval for overdrafts as they are experiencing shortfalls,” he said.

Qonde declined to name the institutions.

- News24.com