By Papama Meleni

The 2025 Budget Speech by Finance Minister Enoch Godongwana has sparked a critical conversation about the economic pressures facing South African students. With proposed VAT rate increases from 15% to 16% over two years, the government aims to generate additional revenue – estimated at R28 billion in 2025/26 – while raising important questions about the impact on student affordability.

Economic Context and Government Rationale

The VAT increase is part of a broader strategy to fund essential services in health, education, transport, and security. The government argues that this approach is less likely to harm investment and economic growth compared to raising corporate or personal income tax. However, for students and their families already struggling with rising living costs, this tax increment represents a significant financial burden.

Impact on Students

The VAT increase will inevitably lead to higher prices for goods and services, exacerbating financial strain on students. Essential items such as:

• Food
• Transportation
• Utilities
• Textbooks
• Accommodation

These will become more expensive, potentially forcing students to make difficult choices between education and basic survival. The burden falls disproportionately on students from low-income families, who often rely on part-time jobs, financial aid, and significant sacrifices to pursue higher education.

Mitigating Measures

The government has proposed several protective measures to cushion the impact:

• Expanding zero-rated food items to include canned vegetables, dairy blends, and certain organ meats
• Increasing social grants above inflation
• Continuing the COVID-19 Social Relief of Distress grant until March 2026
• Additional education investments, including:
  • 1 billion to retain approximately 11,000 teachers
  • R10 billion for Early Childhood Development subsidies
  • Support for approximately 700,000 additional children up to four years old

Long-term Implications

The potential consequences extend beyond individual financial hardship:

• Increased student debt
• Higher financial stress
• Potential negative impacts on academic performance
• Risk of higher dropout rates
• Limitation of social mobility

Organizations like the South Africa Student Solidarity Foundation for Education (SASSFE) argue that these challenges directly contradict the principle that higher education should be a right, not a privilege.

Recommendations

1. Targeted Financial Support
   • Increase scholarship and bursary programs
   • Develop more comprehensive financial aid packages
2. Policy Advocacy
   • Lobby for nuanced tax policies that protect educational accessibility
   • Explore alternative revenue generation methods
3. Community Engagement
   • Mobilize alumni, corporations, and stakeholders to support student funding
   • Create collaborative solutions to address affordability challenges

 

Conclusion

The VAT increase presents a complex challenge for student affordability. While the government seeks to generate revenue for critical services, we cannot lose sight of the ultimate goal: creating genuine opportunities for all South Africans.

Education remains the most powerful tool for individual and societal transformation. As we navigate these economic challenges, we must ensure that the path to knowledge remains open to all, regardless of economic background.

In the words of Amilcar Cabral, people are fighting “to win material benefits, to live better and in peace, to see their lives go forward, to guarantee the future of their children.” For students, education is that future – and we must protect it, nurture it, and make it accessible.