While education is universally recognised as a key driver of economic and social progress, local education spend – and specifically consumer investment – in this space is a good indicator of the health and growth potential of the sector.
It also sheds light on spending priorities and hard choices. With the past five years seeing both massive disruption and innovation in the space, local data through this period is telling. As education costs increase, affordability is decreasing. We’re also seeing a corresponding re-evaluation of career paths in line with future employability. Dumisani Sibanda, Fundi’s Executive Head of Strategic Projects, explains.
The past five years have seen a massive shift in how – and what – we learn. From how individuals engage with learning material, to what, when, where and why they learn, the sector has been fundamentally and forever changed. “While many of the disruptions experienced, and their corresponding solutions, can arguably be tracked back to Covid-19, most of these shifts and evolutions where already in play,” says Sibanda. “Covid-19 merely fast-tracked and multiplied them in a comparatively short space of time.”
He notes that beyond the rise of digitisation, AI and online learning, one of the most significant trends over the past five years has been the steady increase in the cost of education. Private school fees, university tuition and associated costs such as textbooks, transportation, and technology have all seen significant hikes: “Between 2018 and 2023, private school fees have increased at an average annual rate of 7 – 10%, outpacing inflation. This has placed a growing financial burden on families, leading to a re-evaluation of education choices; many of them in terms of studying post matric.”
Tertiary education has similarly not been immune to these increases. University tuition fees have risen, particularly in fields such as medicine, engineering, and business, which are in high demand. “The cost of living for students, including accommodation, study aids and equipment, as well as food and transport, has also escalated, further stretching family budgets,” says Sibanda. “This can clearly be seen in Fundi’s own data over this five-year period, where loans are being structured differently. In 2018 for example, a typical tertiary loan saw 90,7% of the total loan amount allocated towards fees, with just 6,0% and 2,3% towards a laptop/ equipment and accommodation respectively. In 2023 however, only 72,2% was allocated towards fees, with 23,2% and 4,2% now committed to laptops/ equipment and accommodation.”
While the shift towards heavier investment in digital devices, data access and online learning platforms is a legacy of the Covid-19 pandemic, Sibanda notes that the pandemic exacerbated existing inequalities. “This period highlighted the digital divide in South Africa and the need for more equitable access to education resources. The realities facing low and middle-income households, especially those in the ‘missing middle’ space were undeniable. Many students were unable to continue with their studies during this period, falling behind and losing momentum.”
Rethinking future paths and options has remained an ongoing theme post Covid, especially with the rise of AI. “As this evolves – rapidly influencing future options – and the cost of traditional higher education continues to rise, there has been a noticeable shift towards vocational and skills-based education. “Many families are opting for shorter, more affordable courses that offer direct entry into the workforce, or a skill that can be ‘sold’. This trend is being driven by growing recognition of the need for practical skills in the job market and the increasing availability of online and blended learning options. This shift is likely to continue as more South Africans seek to balance the cost of education with the need for future sustainable employability.”
While Fundi’s data shows inflation-linked growth, the number of loan units over the five years has decreased by just under 20% - except in the case of women. “As primary caregivers and increasingly the financial managers of households, women are influencing how and where education funds are allocated. This trend has been particularly evident in single-parent households, which are predominantly headed by women in South Africa.”
Sibanda notes that between 2018 and 2023, women have been intentional about investing in education, not only for their children but also for themselves. “We’ve seen an increase in the number of women pursuing higher education and vocational training as a means of improving their employability and financial independence. It’s clear that women are more likely to prioritise spending on education-related expenses, even when household budgets are tight, reflecting their commitment to securing better futures for themselves and their families.”
He adds that Fundi has also seen an increase in the number of women enrolling in courses related to health, education and social sciences – fields that are often seen as stable and offering reliable employment opportunities, especially in the public sector. “The growing availability of online education platforms has also allowed women to pursue their studies while balancing other responsibilities. Financial products geared towards unlocking education opportunities – like Fundi’s – are fuelling and supporting this trend and helping women achieve their educational goals.” That being said, Sibanda emphasises the importance of financial literacy and planning, particularly for women who are balancing multiple financial responsibilities.
With the latter half of the academic year now fully underway, Sibanda believes that the trends seen from 2018 to 2023 will likely continue to shape education spending in South Africa, with women playing a more prominent role in these decisions. “The rising cost of education, coupled with the ongoing impact of economic challenges, will drive further changes in consumer behaviour. There are potentially tough choices that need to be – and will be – made by consumers. That being said, private sector funding providers such as Fundi, will have a crucial role to play in supporting families with financial products and services that make education more accessible and affordable. We remain committed to this,” he concludes.
PERSONAL FINANCE