By Matthew Lester*
The National Student Financial Aid Scheme (NSFAS) helped 186 150 university students with financial aid totalling R7 billion in 2015.
That’s getting towards 20% of all students. Hopefully this will increase substantially within the short term.
The problem is that NSFAS is targeted to help the poorest of the poor. What about the not-quite-so-poor students?
Many of these students have working parents or guardians who have no prospect of affording university fees. Some borrow far more than they can afford to, simply to deal with daily living and land up hopelessly in debt for years to come. I expect even more parents will land up in this predicament now that the minimum initial payment policies of universities have been relaxed.
Now this is where employers can make a substantial contribution by simply recognizing that ‘social investment starts at home’. So we need to challenge employers to come to the party to help solve the #feesmustfall crisis.
Last week Dr Sizwe Mabizela, Vice-Chancellor of Rhodes University, put out a special request to staff and alumni to assist deserving students. This week Professor Jonathan Jansen of the University of the Free State has launched an appeal to raise R100 million. Last year Julius Malema demanded that every company listed on the JSE should sponsor at least 100 students. This is great stuff.
Employer donations to bursary funds rank for deduction in terms of section 18A of the income tax act. This is not always the preferred solution, as the employer is not allowed to select the recipient of the bursary.
But a tax nerd lives to those fine words ‘there is more than one way to skin a cat’.
There was an important development in the 2016/17 national budget. But in the excitement of the SARS WARS few noticed. The bursary provisions contained in section 10(1)(q) of the income tax act were revised upwards.
Today an employer can provide a tax-free bursary to a relative of an employee if the employees’ salary is less than R400 000 per annum. The bursary can be as much as R40 000 per annum. This potentially allows employers to help about 1,5 million more working parents with tax-free bursaries for their children.
So now the trick is for working parents to challenge their employers to start a new corporate social investment project that starts at home! That’s real transformation.
All companies should strive to create in-house bursary schemes that ensure that lower income employees with children who deserve to be at university be given the opportunity to get there.
Students, sorry for this is technical tax stuff. If your parents earn less than R400 000 per annum (That’s R33 333) get this article to them or relatives and get them to show it to their employers. Every human resources manager in South Africa should be working on this.
- Rhodes University Professor Matthew Lester was educated at St Johns College, Wits and Rhodes universities. He is a chartered accountant who has worked at Deloitte, SARS and BDO Spencer Steward. A member of the Davis Tax Committee investigating the structure of aspects of the RSA tax system, he is based in Grahamstown