By: The Growth Institute

There is a perpetual myth that public universities and colleges fleece students by making class fees as expensive as possible. According to this myth, public universities and colleges are the apex of exploitative capitalism.

It might come as a shock to many to know that class fees represent roughly 30% of a public tertiary institution’s total income. Another 40% of a public university’s income is derived from State funds, based on the throughput rates achieved by public universities and colleges. The remaining 30% comes from the so-called Third Stream, and more specifically from private donations and from teaching specialised courses for corporates.

Announcements that public universities and colleges should not charge for class fees, means that someone else would have to make up the 30% revenue shortfall that would result from “Free Education.”

Looking specifically at the State’s 40% contribution, it may also come as a surprise that the State has decided to reduce undergraduate subsides in favour of post-graduate subsidies. This means that there is less funds available for a first year or for any other undergraduate to start studies or to complete studies.

The State’s strategy to put an emphasis on post-graduate subsidies is not good news for undergraduates. This means that undergraduates have to have counter-strategies in place to ensure that they continue to receive State Funding. That counter-strategy is not to be found in uprisings and burning of campuses. Instead, the counter-strategy must be to achieve better marks that will enable students to claim merit bursaries.

The argument is that not all students can achieve high marks because they come out of difficult circumstances where the school system failed them. The answer to that argument is that private institutions draw students from the same recruiting pool that public universities and colleges use. The answer is also that public tertiary institutions achieve an annual throughput rate of 20%, whereas private institutions achieve an annual throughput rate of more than 50%.

The fact that State subsidies for undergraduates are reduced in favour of post-graduates means that private institutions would have to ensure they have competitive pricing models available that will meet the demand for undergraduate studies in the near future.