How large is the missing middle and what would it cost to fund?

ABSTRACT

The concept of the missing middle has gained currency within South African post-school education and training (PSET) discourse in recent years. The term has been defined as representing those too wealthy to benefit from National Student Financial Aid Scheme (NSFAS) funding, but who struggle to afford higher education. The missing middle currently refers to those students from households with incomes between R350 000 and R600 000. Whilst some 6% of South African households have incomes between R350 000 and R600 000, differing participation rates and average household income levels, amongst students from different race groups result in an estimated size of the missing middle in 2019 of 343 000 students out of a total PSET population of 1.4 m. The cost of funding full bursaries for all these students at 2019 prices is estimated at R19.2 bn. If a sliding scale of support is introduced, the total cost falls to R11.4 bn.

KEYWORDS:

• Post-school education and training
• funding
• missing-middle

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Calculated from data provided by Xpert Decision Systems (XDS) analytics using South African Credit and Risk Reporting Association (SACRRA) data.

2 Whilst there is a level of flexibility afforded by NSFAS on the R350 000 income limit, the resultant funded/unfunded decision still leaves the same substantial tax rate at whatever limit is set. The move to fully fund students following the December 2017 announcement, meant that the historical concept and calculation of an ‘expected family contribution’ fell away.

3 Levy et al.’s (2014) investigation compares the average monthly earnings for the largest income earner per household, by ventiles, for South Africa, Mexico and Turkey.

4 Personal communication.

5 The Department of Higher Education and Training (DHET) sets recruitment targets for universities and TVET Colleges annually. Refer to NSFAS Research Report 5: Predicting university and TVET demand for NSFAS Bursaries.