The changing face of public funding of higher education, with special reference to South Africa

Stellenbosch Working Paper Series No. WP05/2007

Author(s): Pierre de Villiers, Gert Steyn

JEL Classification: H52, I22, I23

Keywords: Higher education, education financing, qualifications

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Higher education displays characteristics of both private and public goods and there is a trend worldwide to expect individuals to pay more of the costs of their higher education. In South Africa public funding of higher education decreased from 0.86% of GDP in 1986 to only 0.66% in 2006. Due to the decrease in state appropriations, student tuition fees had to be increased to compensate for this loss of income. In the process staff numbers were kept relatively constant, while student numbers increased at a much faster rate. Two future scenarios, based on public higher education expenditure as a percentage of GDP and on real state allocation per WFTES, are included. Although the qualifications awarded per FTE academic staff member increased over time, the graduation rates of the higher education institutions in South Africa are worsening. High-level research, measured in publication units per FTE academic staff member, shows a disturbing decreasing trend since 1997.