An investment in your future
Estian Calitz
Students come to university for many different reasons. Certainly, most of them are there for the right reasons: for a broader education, to better prepare themselves for life ahead, to obtain knowledge and to develop their ability to think critically and solve problems. There are of course also those who don’t take their studies seriously, who are led astray by the fun of student life and the freedom to be away from the discipline of school and the parental home. And there are even parents who send their children to university because they think it will cost less than the damage they can do at home.1
There are also those who don’t know what they want to do with their lives and come to university to see “if it is for me”. There was a student who at the beginning of the year was asked by a lecturer for which subjects he wanted to enrol, to which he answered: “I don’t know; what have you got?” The following story will attempt to capture some of the different reasons – and consequences – of going to university.
***
Once upon a time there were three young people, John, Thandi and Rashid. They became friends when they did lifesaving together at Margate in grade 9. During the December holiday at the end of grade 11, they seriously started talking about their future after school.
John struggled at school, but was an excellent sportsman. He thought about going to France for a few years to play rugby and see what life has to offer. In any case, his dad did not have money to payfor further studies. Thandi was a good student and wanted to become a medical doctor, but her school didn’t offer mathematics and she wouldn’t be able to get admission to medical studies. Rashid was head boy and dux scholar at his school and wanted to do actuarial studies.
After school the friends’ roads parted. It was only twenty years later, at a Margate reunion, that they met each other again. Excitedly they told each other of their experiences.
“So John, did you go play rugby for France? You must have, since the French now prefer playing soccer because the French rugby team hadn’t won a game in twenty years,” Rashid joked.
John looked at him with a serious expression. “My father passed away shortly after I went to France. I came back and took over his photography business. It was tough going, because in the town where I’m from, people don’t take a lot of pictures. When the digital camera arrived I took a risk: I sold the business (not for very much), moved to the city and for three years I rented an outside room in a shabby neighbourhood and sold cleaning products. Because of my background in the photography business as well as a contact from an old rugby friend, I succeeded in importing the first batch of digital cameras to South Africa. Later on I become the biggest international camera producer in Johannesburg and started making sport videos. When my partner and I got the licence for the filming of the 2010 Soccer World Cup, I got my big break: the beginning of a successful business.”
“None of you is asking about me,” said Thandi. “I finally got provisional admittance to study medicine, but I first had to complete my mathematics. It took two extra years and increased the cost of my studies. I did have a bursary and loans, but it wasn’t enough. In the evenings between six and ten I worked at the local hospital in order to pay my debts. But I wish that for nobody. I studied until three in the morning. At the end of my third year, my health was impaired and I had to sit out for a year. But I persevered and I finally finished everything – and later I specialised as pediatrist. It took me ten years to pay off my debt, but it was all worth it. My practice is financially healthy, but the best of all is that I can live out my passion in my work.”
“Guys, my story is not such a happy one,” said Rashid, who was unusually quiet. “My first year was a huge success. I passed all my subjects with distinction and won the prize for best first-year student. But it went to my head and life was just too much fun. In my second year I nearly didn’t pass. In my third year, when I became head student at my residence, the writing was on the wall. I failed my year and lost my bursary and my place in the residence. I was down in the dumps. I got a job, but earned very little. Five years later I realised that I had wasted so many chances. Thanks to my girlfriend’s encouragement, I enrolled at Unisa in a course in financial mathematics. I only got my degree when I was thirty – better late than never, but then things began looking up and nowadays I develop new financial products for a big funds manager. But the cost of wasted opportunities is very high.”
Two days later the three said goodbye to each other and lived long and happy lives, once again aware of the many dimensions and crooked roads of working life.
***
Whatever the reason for university studies, there is a question that every student should ask. It is also a question for all aspirant students who realise how much their parents, friends or family sacrifice financially and otherwise in order to provide them with the opportunity to further their studies. The question is: Is the money that is being spent a good investment? Will it give a high yield? Wouldn’t it have been better if Thandi and Rashid – and tens of thousands of other young people in South Africa who register at universities every year – rather start working directly after school like John did? Then they can start paddling their own canoes from early on with the promise of big success like John had achieved. And that while Dad, Mom, Grandfather, Grandmother or any other benefactor don’t have to loan money or stand surety; or, if they have the money can rather invest it in shares, property or even a new business enterprise. After all the latter investments don’t talk or answer back, get sick or dispirited, or prefer an exciting night life over a boring class!
Do university studies make financial sense?
A lot of research has been done in order to determine if university studies are a good financial investment. The most general conclusion is that the earning capability of someone with a university degree is better than that of someone without it. Therefore the cost of university study is not a (dead) expense, but an investment. Of course there are Johns (like in our story), but they aren’t many. Yet, a university degree is no safeguard against unemployment.
How should one think about the question in the above heading? We must bear in mind that university studies, sometimes also called higher education, hold two benefits.
The first is the private or individual benefits, that is to say the direct benefits for the individual in obtaining a higher education qualification. The second is the public benefits, which refer to the benefits for the community. Both types of benefits can only be generated by spending money. In the first case there are personal expenses for the individual. In the second case there are the expenses of the government and to which every taxpayer in the country by implication makes a contribution.
Let’s think about the benefits of university studies. In 2006 a report was published by the South African Council on Higher Education on the impact of changing sources of financing on higher education. In it there is a useful summary of the results of a study that has tried to measure the yield of different levels of education over the period 1960-1999. The figures in table 1 below show the measurable yield2 on individuals’ investment in education in different areas of the world. The benefits refer to the higher income which highly schooled workers normally receive. (Other benefits that are difficult to measure and cannot be added to the calculation of such an analysis, but which further increase the value of higher education, include the fact that higher education usually make people more productive and enable them to qualify for better paying jobs.) The investment (individual costs) refers to the direct costs (tuition fees, books, stationary, etc.), the extra transport and other costs, as well as the indirect costs such as forfeited income. The latter occurs because a person who studies full-time doesn’t work and therefore doesn’t earn a salary. The table shows that in all parts of the world the private measurable benefits exceeds the cost with more than 10% and that the highest yield (27,8%) has been recorded in sub-Sahara Africa. An analysis of South African census statistics with regard to people between the age of 45 and 64, also shows that the average annual income of a person with a higher education qualification is higher than in the case of people with a lower qualification: A person with a master’s degree earns more than someone with a Bachelors degree, who in turn earns more than those who only have a high school education.
Table 1: Yield rate on investment in higher education
| Area | Yield rate (%) |
|---|---|
| Asia | 18,2 |
| Europe, Middle East, North Africa | 18,8 |
| Latin America | 19,5 |
| OECD countriesα | 11,6 |
| Sub-Sahara Africa | 27,8 |
| World | 19,0 |
α Organisation for Economic Cooperation and Development (OECD).
It seems as if university studies are a good financial investment, one where the benefits notably exceed the cost. Economists refer to the expenditure on education or teaching as “investment in human capital”. This investment has different values for different people or groups. For parents or benefactors the yield on their investment can take on different forms, monetary or non-monetary. For some there is the repayment of study debt (with interest); for others there is the pride towards a young person who grabbed the opportunity for self-actualisation with both hands; and for others there is the prospect of somebody who can look after you in your old-age. Furthermore – despite whether the investment was made by parents, family, friends, by a student who financed him- or herself or by the government (the community) – it is also an investment in a more educated (and hopefully better civilised) community, with more opportunities for everyone.
There are of course several things that can go wrong with this investment. Let us look at a few examples. A student can fail – like Rashid in the story. Sometimes the cause is out of the student’s immediate control, for example bad health or family circumstances. In other cases the student is in a position to immediately do something about the matter, for example bad achievement due to bad class attendance, undisciplined or bad study practices and unfavourable living conditions. Whatever the reason is, if the student does not get a university degree, there is a good chance that the student’s financial position will be worse than the person who started working directly after school. Not only does the person have many nearly fruitless expenses and debt that cannot be repaid, but a lot of years have also gone by during which no income has been earned. People might see the exposure to the university environment, the social culture and the contacts that have been built up as useful spin-offs. You cannot argue against that, but the benefits should be weighed up against the cost. The fact is, it can take years to catch up on the financial arrears in comparison to people who started working directly after finishing school. From a purely financial point of view, the intended investment was really just a dead loss (or close to it).
Unfortunately not achieving a university qualification is the experience of a large percentage of students who enrol at South African universities. The National Department of Education annually publishes the study success of students. The surveys started with the group of students who in 2000 for the first time enrolled at South African universities and technicons3 for a three year degree programme. In the case of this group it appeared that nearly one third (30%) had discontinued their studies during their first year. After three years half the group had already discontinued their studies. After four years, less than one quarter (22%) had obtained their university degree. Even if we leave universities that offer distance education out of the account, we find that only half of the students were able to graduate after four years of studying.4 That is why young people should think carefully before they decide to go to university. If it does not work out they should decide as soon as possible to rather discontinue their studies. There comes a point when it is no longer about maximising the return on the investment, but minimising the loss on the investment. Naturally this is not so simple. Some people (like Thandi in our story) take longer than others to get on course. Some people realise they should rather follow another course and eventually complete it with great success. Others, like Rashid, only find their feet later and their perseverance is admirable. It pays to see the student advice office that each university has, as a source of investment advice – advice which should be obtained as quickly and regularly as possible.
What do university studies cost and who pays for it?
Up to now we have only spoken very generally about the cost of university studies. Now it is time to get more specific. What we are interested in is what the cost is for the student, in other words, after the government’s contribution has been subtracted. Here we will focus on the cost for a student who enrols at a university for the first time.
Something we must keep in mind is that over the last ten to twenty years the government (and therefore the taxpayer) in South Africa, as is the case in most countries in the world, has been contributing an ever decreasing part of the cost of university studies. In the same 2006 report by the South African Council on Higher Education to which was referred earlier, it shows that for example the Dutch government, having contributed 84% of the total income of the country’s universities in 1985, reduced its contribution to 69% within six years5. This in part reflects the changing view of the role of the government in the financing of higher education. The basic argument is that the education or training of individuals in a community holds many benefits (so-called externalities) for the community as a whole. Therefore it is justified that the broad public (via taxes) make a contribution to the cost of education.
The argument goes on to say that the better the individual’s prospects are to earn a good income as an economically active member of the community, the bigger the contribution is that he or she can make towards the cost of his or her education.
Because the investment in university studies is seen as one that delivers a yield to the individual during his or her lifetime, the government argues that the individual should make a relatively bigger contribution. To put it plainly, the case for “free” education for a learner in grade 1 is stronger than for a doctoral student.
The above-mentioned 2006 report on the impact of changing sources of financing for higher education indicates an alarming phenomenon with regard to government spending on higher education in South Africa as a percentage of the total value of production in the country (economists use the term “gross domestic product”). This percentage was lower than the average for a group of 84 countries (scattered over all six continents) which were studied. South Africa did worse than the average value of the 15 African countries that were included. For a country from which a lot of leadership and success is expected in the area of economic development in Africa, and in light of the high demands for expertise set by the knowledge economy, data like this surely calls for reflection. At the time when this book was finalised, there was a growing advocacy for the necessity of bigger government investment in higher education in South Africa.
The relatively smaller government contribution to the financing of higher education is an important reason why today it costs a student a lot more to study at a university than before. The cost consists of different elements; some of which can be found in the universities’ yearbooks. As a matter of interest an example of the cost of tuition for a three-year BA degree at the University of Stellenbosch for the following years are included in table 2: 1911 (the year after the establishment of the Union of South Africa), 1946 (the year after the end of the Second World War), 1961 (the year when South Africa became a republic and the year the South African rand replaced the British pound as currency), 1977 (the year after the Soweto uprisings), 1995 (the year after the new constitutional dispensation was put into operation) and 2006. The figures in the table are exactly as they have been quoted in the yearbooks and don’t take into consideration that at different times different smaller cost items have been included and excluded from the price . Take note that these fees defray the cost of academic teaching as well as certain support services delivered by the management and administration of the university. In the third column the tuition fees are shown in 2006 values. Keep in mind that inflation has caused the value of a South African coin or note to decrease a lot in the last nearly 100 years. Things that today will cost you R100 would have cost you just 75c in 1910!
Table 2: Tuition fees, University of Stellenbosch, selected years6
| Study year | Tuition fee for first year of three year BA-degree | Cost in 2006 pricesα (R) |
Av. annual inflation rate between years indicated | Av. annual increase in tuition fees between years indicated | Factor by which tuition fee in 2006 wasmore expensive than selected year |
|---|---|---|---|---|---|
| 1911 | ₤17 | 4 556β | 1,7 | 0,04 | 3,2 |
| 1946 | ₤31 | 4 616β | 3,5 | -0,8 | 3,2 |
| 1961 | R92 | 4 109 | 6,0 | 9,8 | 3,5 |
| 1977 | R410 | 7 229 | 13,3 | 15,5 | 2,0 |
| 1995 | R5 440 | 10 069 | 5,9 | 9,3 | 1,4 |
| 2006 | R14 391 | 14 391 | 5,3 (1912–2006) |
6,6 (1912–2006) | - |
8,8 (1962–2006) |
11,8 (1962–2006) |
α The 2006 value was calculated by adapting the cost with the annual inflation rate as measured against the official consumer price index with regard to metropolitan areas for opdateer.
β When the South African rand replaced the British pound as currency, ₤1 was equal to R2. This exchange rate was used for the years before 1960.
With reference to the quoted tuition fees for a standard BA degree at the University of Stellenbosch (excluding the extra cost of books and notes), the most important observation with regard to table 2 is that the private cost for higher education has consistently increased faster than the inflation rate. During the whole period between 1961 and 2006 the tuition fees annually increased on average with 3 percentage points more than the inflation rate. In 2006 this programme was 3½ times more expensive than in 1962; not much different from the ratios in 1911 and 1946. These observations provide quite a good account of the cost pattern with regard to higher education in general. If this trend continues it means that any financial planning in order to make provision for future studies, should allow for the possibility that the cost of studying for the individual will rise much faster than projected inflation.
Tuition fees differ at different universities, just as there are different terms that are used to refer to costs. Other terms that are also used are “class fees”, “programme fees”, “study fees”, “course fees” and “module fees”. As befits a market-based economic dispensation, the government does not apply price determination or price control with regard to tuition fees. From time to time you do hear threats of it happening and there are organisations and interest groups asking for it, but at the time this book went to press, university councils in South Africa were still responsible for determining their own tuition fees. So can universities charge as much as they want? Definitely not. Factors countering exorbitant increases in tuition fees include the fact that universities compete against one another as well as the bargaining power of students and student organisations.
A degree programme like BComm or MBChB consists of modules and at most universities the cost is calculated by adding up the “prices” of the modules. There are also differences in the “price” of a degree programme (the tuition fee) as it appears in university yearbooks because some universities include all costs while others recover it separately. The latter costs include items such as study material, study-related transport, laboratory fees, books and computer facilities. When the costs of study at different universities are compared, it is important to determine what additional costs must be added in. The University of South Africa is the cheapest because distance teaching costs less than contact teaching (because residential universities must and maintain build lecture rooms and laboratories and need more lecturers relative to the number of students).
The tuition fees are the greatest single cost item, but of course by far not the only one. There are the cost of prescribed books that you have to buy yourself at bookshops, accommodation costs, the cost of membership for societies and sport clubs, etc. Most universities allow other university-related costs besides tuition fees to be added to the student’s account. In most cases that university’s account is sent to the parents who pay it according to the payment method arranged with the university. In order to give an indication of costs and their relative extent, table 3 contains the percentage share of the different cost items which appear on the account of students in university accommodation at Stellenbosch University (the percentages were calculated as the average for all students over a period of the three years 2003-2005). It is notable that study-related expenses only amount to a little more than half (53%) of the total expenditure.
Table 3: Share of different cost items on study account
Average % for students at Stellenbosch University, 2003-2005
| Category | Cost item | % of total |
|---|---|---|
Study-related expenses (53,1%) |
Tuition fees | 47,3 |
| Material costs | 2,1 | |
| Handbooks (only those bought directly via the university) | 1,3 | |
| Photocopies and printing | 1,2 | |
| Internet access | 0,8 | |
| Study-related travelling | 0,2 | |
| Laboratory fees | 0,2 | |
| Subtotal: study-related expenses | 53,1 | |
Accommodation (45,4%) |
Accommodation fees | 36,3 |
| Meals | 8,6 | |
| Other (e.g. washing) | 0,5 | |
| Subtotal: accommodation | 45,4 | |
Culture, sport and recreation (1,2%) |
Society fees | 0,4 |
| Sport membership fees (including gymnasium) | 0,8 | |
| Subtotal: culture, sport and recreation | 1,2 | |
Other (0,3%) |
Diverse items | 0,3 |
| Total | 100,0 |
There are of course many expenses besides those which are added to the student’s formal university account. There is the cost of transport to and from the parental home. Pocket money, stationery and medical costs are further expenses. Besides this, students sometimes find a number of hidden costs which are brought about by association with a group, such as outings and events, even clothes bought due to peer pressure for the sake of group identity. The transport costs for students who do not live in university accommodation are generally also much higher.
Due to differences between universities it is not meaningful to provide estimations of true costs. Table 4 can however be used as checklist for the reader’s own calculations based on the information supplied by the concerned university.
Table 4: Calculating the cost of university studies
| Expense category | Item | Amount (fill in yourself) |
% of total (calculate for yourself) |
|---|---|---|---|
| Study-related expenses | Registration fees (if applicable) | ||
| Tuition fees (the university yearbook’s cost for the programme [or modules] registered for) | |||
| Prescribed books | |||
| Study material | |||
| Laboratory fees | |||
| Photocopies | |||
| Travel costs related to tuition | |||
| Computer fees (including internet access) | |||
| …………… | |||
| …………… | |||
| Accommodation | Accommodation fee (university or private accommodation) | ||
| Meals | |||
| Residence fees | |||
| Other (e.g. events, washing) | |||
| …………… | |||
| …………… | |||
| Culture, sport and recreation | Membership fees for societies | ||
| Gymnasium | |||
| Outfits and equipment | |||
| Other (e.g. events, transport) | |||
| …………… | |||
| …………… | |||
| Medical | Student health servicesα | ||
| …………… | |||
| Communication | Cell phone or telephone expenses | ||
| …………… | |||
| Stationery | |||
| Computer and related items (if applicable) | Expenses related to use of own computer (if applicable), like paper, ink for printer, repairs | ||
| Transport | Expenses related to use of own car (if applicable), like insurance and maintenance | ||
| Travel fees | |||
| Parkingβ | |||
| Insurance | Car | ||
| Other equipment | |||
| Personal casualtiesγ | |||
| Financing costs | Interest on loans | ||
| Pocket moneyδ | Diverseε | ||
| ………….. | ………….. | ||
| ………….. | ………….. | ||
| Total | 100,0 |
α In cases where a student uses health services supplied by the university, it will appear on the student’s account.
β In most cases you will have to pay for a permanent parking space for a car.
γ Take note that the conditions on which students enrol at universities probably entail that the students themselves are responsible for the cost of personal casualties. Some students therefore prefer to take out insurance for it.
δ Depending on the agreement between the student and his or her financier, pocket money can cover a large number of things, such as personal care, clothing and shoes, movies, food and drink, et cetera.
ε When students do not make use of university accommodation, items such as accommodation fees, house fees, meals and washing will be replaced with rent money (for a room or apartment), groceries, cleaning services (if applicable), extra transport (if the student cannot walk to class), etc. If all these items are added to pocket money, the amount will be much higher than if they are listed separately.
How can a student finance the cost of his or her studies?
Very few students are in the privileged position that they (or their parents) can pay cash for their studies and that they are able to start their career without any study debts. What sources of financing are available for students whose parents, family or friends cannot pay for everything? Aside from own funds (such as money that is earned by the person him- or herself) there are two basic sources: bursaries or donations and loans.
Bursaries are available on the grounds of several considerations and from different organisations or institutions. Schools give bursaries to top students and universities also make large amounts available in order to recruit proficient students on the grounds of their achievement before they come to the university. Some universities offer the benefit of free study in the first year or more; while others offer bursary money as a set amount for one or more years of study. Some bursaries are large enough to even cover accommodation costs, or part of it. Universities also offer bursaries to students on account of their achievements after they have joined the university, in other words on account of their university achievements. Many of the bursaries made available by universities are comprised of money that has been received from benefactors or bursaries offered by potential employers. The latter is usually accompanied by preconditions to go and work for the provider of the bursary or to pay back the bursary in the case of a breach of contract. In most cases students find that bursary money does not cover all their expenses and they then supplement it with study loans for example.
The university’s core business is providing academic services and not financial services. Universities however do offer study loans for which a repayment agreement must be signed. Usually the parent or someone else must stand surety for the repayment. Often a so-called means test is used to ensure that the university preferably makes loans available to people who cannot obtain money so readily from private institutions like banks. Some bursaries are connected to specific activities, for example sport; others are for certain fields of study (for example engineering). Most universities provide certain bursaries only to people from previously disadvantaged communities as an integrating element of their diversity strategy. Any university’s bursary office will be able to provide more details, usually in the form of a booklet that contains all the bursary information.
Since 1991 the government also has a bursary and loan scheme known as NSFAS (National Student Financial Aid Scheme). It is managed by an organisation which has been established specifically for this purpose and which uses universities as agencies. Applicants must be South African citizens. They can qualify for NSFAS bursaries if they:
are registered at a South African university;
study for a first educational qualification (or a second qualification if it is necessary for practicing the chosen occupation);
have the potential to achieve academic success; and
do not have the financial means at their own disposal.
NSFAS provides loans at low (subsidised) interest rates with a repayment plan for when the person starts earning a salary. No guarantees are required. The scheme also rewards success by remitting a percentage of the study debt if and as certain modules are passed. The maximum debt relief of 40% is realised when a student passes all the modules of a degree programme. In reality the student can therefore determine for him- or herself how big the financial bursary component of the initial loan will be. More information is available from: NSFAS, Private bag X1, Plumstead 7801, by e-mail to info@nsfas.org.za, online at http://www.nsfas.org.za, or telephonically at 021 763 3200.
Different countries have different forms of study help. From the mentioned 2006 report on the impact of changing sources of financing for higher education it appears that Australia for example has a government scheme according to which students start repaying their higher education fees when they enter the job market and start to earn more than a certain amount of money. It therefore comes down to an interest-free loan which must be repaid. In some countries study loans are paid back via the tax system.
Loans for university students are also available from private financial institutions. Most of these institutions have offices or agencies on university campuses and provide loans at relatively favourable interest rates with repayment that usually starts when the student starts working. As a rule banks require some or other form of security. Universities are usually helpful in bringing students and/or their parents in contact with these institutions.
Practical advice
Keeping the cost of studying as low as possible (and therefore maximising the yield of the investment) requires careful planning of your studies and the most favourable way of financing. There are also several practical issues that make the financial management of this investment a lot easier and more cost-effective. The best way of discussing it is by answering a few frequently asked questions.
When must what be paid? Different universities have different payment arrangements, but in general the following applies:
An application fee which must be paid when the student’s application is handed in (usually before a certain date in the year preceding the first year of study). The application is meant to cover the cost of processing the application and is usually not refundable if the application is unsuccessful.
A non-refundable deposit or admission fee, which can amount to 20 to 30% of the tuition fee and which a university views as money to cover a student’s administration cost.
The rest of the tuition fee, which can be paid once-off or in instalments over a period of time.
Accommodation fees for which a deposit is required when applying and of which the rest is paid in the same way as the tuition fee.
Society, club or gymnasium fees of which the method of payment will differ, with many universities allowing it to be debited against the student’s formal university account.
Depending on the payment facilities of the university, university accounts can be paid with cash, by cheque, by debit order or electronically. If students receive loans or bursaries from institutions outside the university, it is usually arranged that the money be paid directly into the student’s account.
What about banks? Banks are quite keen to open accounts for students. After all, it might just be the account of a rich future businessman or -woman who might choose to stay a client at that bank for the rest of his or her life! Students have a choice between cheque accounts, savings accounts, credit cards and debit cards. It pays to compare the costs before making a decision. When a loan facility is linked to an account, it can be expected that the bank will require a guarantee.
How do you pay for all kinds of necessities? Necessities such as books, stationery, medicine and pharmaceutical products, groceries and clothing can be bought cash or with a credit or debit card or you can open an account at the shop or business. In many cases such businesses are available on or near the university campus and are well equipped to open student accounts (with or without the parents being present) at the beginning of the year.
Does a student get prohibited from further studies if tuition fees get in arrears? Many universities give a cash discount if the year’s tuition fees are fully paid before a certain date. Otherwise the payment method comes down to a mixture of advance payment and pay-as-you-go. The teaching service is thus performed without asking for a payment guarantee, except in the case of a loan contract. The only fall-back option that a university has in order to ensure that students meet the financial obligations is to withhold results if payment is in arrears. Students are generally also not allowed to register for a new study year if their account is in arrears. Where possible universities are willing in special cases and with the application of means tests to offer bridging financing or loans at the beginning or a new year or when awarding of the student’s degree is in question. Some universities are even willing to write a letter to the prospective employer stating that the graduate has met all the requirements in order to receive the degree certificate, but without giving the certificate to the student. That enables the student to start earning an income in order to pay back outstanding debt. This practice however is not without risks for the university and is therefore not always met with approval.
How can university studies be made more cost-effective? Lastly, here are a few tips which can help to stretch your rand – and therefore make the dividend on your higher education investment even bigger:
Look out for hidden costs (social events, outings, cost of peer pressure, sport) and avoid them if you have not budgeted for them.
Bear in mind that university life offers many tempting activities which appear much more attractive than attending classes and studying. Of course recreation is very important, but so is a balanced life. Point is, if you want to maximise your educational investment, none of these things, however much their value, can replace a university qualification. To study is expensive. To fail is even more expensive.
Make arrangements if your parental home is far from the university. A lot of money can be saved if two, three or even four students travel together. When student activities take place during long holidays, plan things so the shortest (and therefore cheapest) route to your parental home is possible.
You can save a lot by buying good second-hand books (rather than new ones). Make sure the book you buy is the same edition as the one prescribed. Most handbooks are revised every three to four years after which a new edition is released.
If you make use of a credit card or cheque account, schedule payments so your banking fee, transaction fees and interest are kept to a minimum. The same goes for accounts at shops or businesses.
Budget for pocket money, keep book of all expenses and check regularly that you do not exceed your budget.
The writer thanks several colleagues for their commentary on a previous version of this chapter, and Chris de Beer, Head of Student Fees, Stellenbosch University, for his help with collecting and processing data. The responsibility for the contents remains that of the author.↩︎
These figures have been calculated as the internal rate of return, in other words, the rate which equates the discounted values of benefits and costs.↩︎
After completion of the restructuring of higher education institutions in South Africa in 2005, technicons were either restructured as universities or incorporated into comprehensive higher education institutions.↩︎
Department of Education. 2005. Student enrolment planning in public higher education. Pretoria.↩︎
Steyn, G. & De Villiers, P. 2006. The impact of changing funding sources on higher education institutions in South Africa. Research report of the Monitor for Higher Education. Pretoria: Council on Higher Education, March.↩︎
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