1. Department of Higher Education and Training Student Housing Matters A symposium on funding student housing at public universities and TVET colleges Kgorong UNISA, Pretoria 21 July 2016

2. In this presentation I will outline the Department’s approach to resolving the student housing challenge, and outline the vision we have for developing hundreds of thousands of new beds in a co- ordinated, sustainable Student Housing Programme I will discuss how we are: Fulfilling our constitutional, legislative and regulatory obligations in relation to the provision of student housing Quantifying the need for student housing at public universities and colleges Gathering the evidence to illustrate this need Facing the challenges in meeting the need Exploring the solutions that will provide the hundreds of thousands of beds we need Identifying the partnerships we need to find lasting solutions Crafting the way forward with those partners Presentation Overview 2

3. The Department is fulfilling its constitutional, legislative and regulatory obligations in relation to the provision of student housing Constitution Our constitutional obligation is to provide access to education to all Legislation The Higher Education Act requires the Department to oversee infrastructure development to ensure the health and stability of the system as a whole The Act requires the Minister to approve infrastructure expenditure and agreements, including those for student housing Universities that borrow, construct or sign long leases for student housing without Ministerial approvals are breaking the law. The financiers and developers who are party to these agreements are also breaking the law Regulation In 2015, the Department gazetted minimum norms and standards for student housing. Universities have gone some way to curbing exploitative practices such as cramming students into spaces where nobody could be expected to live, let alone study Context 3

4. In 2011, the Ministerial Review of student housing at public universities provided ample evidence of a dire shortage of beds at all universities There were only 107 000 beds for the 538 000 students – only 18% of students were accommodated in residences, only 5 % of first year students Since then, the Department’s infrastructure grant together with university funds has totaled R2.3 billion – enough for only 9 000 new beds The projected shortage in 2016 is 220 000 beds. It will be at least 400 000 if we reach the Post-School Education and Training policy and National Development plan access targets We will never eradicate the backlog at this rate We will never be able to house future generations of students if we cannot even get rid of the backlog The need at universities 4

5. In 2015, we conducted a survey of student housing at TVET colleges, with equally shocking results There are 50 public TVET colleges -from Vhembe College in the far North, to South Cape College on the southern coast -from Northern Cape Rural College in the West to Umfolozi in KwaZulu Natal in the East They have 264 campuses, and educate 710 535 students There are only 10 120 beds – one bed for every 70 students - only 1.4% of students are able to find a place to stay while they study on campus Another 16 733 students are accommodated by private landlords The need at TVET colleges 5

6. The challenges we face in meeting the need for student housing are multiple, complex and complicated These challenges range from: -inadequate funding for large student housing infrastructure projects -to inadequate bulk infrastructure -limited departmental and institutional capacity to implement infrastructure projects Complex because there is no “one size fits all”, ready-made solution. We need a number of financial models to be able to provide decent housing for students at our diverse range of institutions And complicated because there are many vested interests that do not necessarily have the well-being of the students, the institutions or the health of the system at heart Challenges 6

7. Poor governance and corruption in procurement at some universities and colleges deters student housing investment: -At one university, a residence refurbishment contract expected to cost R300 million, will now cost at least R760 million because of collusion between the developer and management -Another university flouted the HE Act by entering into a R200 million lease without Ministerial approval, rendering it invalid -When agreements go wrong, the Department is expected to bail out institutions that cannot meet their obligations Unrealistic expectations by developers who see student housing as a get rich quick scheme is also a challenge: -Some recent proposals by developers are for 40 year leases with annual escalations of 12% in rentals – this simply cannot be approved if we have the stability of the system and the interests of students at heart At the same time, the Department receives constant complaints from developers about the red tape at universities that stifle projects Challenges 7

8. We need to find lasting solutions to a number of questions: Who is paying for the student housing in the system at present, and how much is it costing? Are students and institutions getting value for money? Are we making the smartest choices in how we allocate student financial aid that pays for student housing, especially private, off- campus accommodation? If the private sector is not entering into partnerships with the public sector, why not? What are the obstacles and can we remove them? And what is the private sector doing instead? The largest business is South Point, with 10 000 beds in all the main university cities. There are dozens of others serving public universities and a few TVET colleges: JJP Varsity Lodges, Respublica, Citiq, Ekhaya Junction, Pulse Living, Slipknot Group, Equicent Eastern Cape, Stagprop, Kovacs, to name only a few, and many of you are here today We need to learn from your experiences Questions 8

9. What would encourage the kind of investment that would build not only student housing, but our institutions? We need to hear today what inhibits investment - are there uncertainties that we as the Department can address? Does poor governance at some universities deter investment? Do we need to update our norms and standards now that they have been in place for a year? What do we need to do to encourage partnerships between universities, colleges and investors? Ultimately, how do we need to work together to ensure there is enough funding and enough capacity to build the more than 300 000 new beds that we need in the next decade? Solutions 9

10. These questions indicate that the problems are complicated, but the solutions can be simple - if we choose to make them so: The Department acknowledges that we will not find solutions on our own - we are not looking for solutions on our own We embrace the idea that we will find solutions in partnerships – these must involve students, university and college administrations, government departments, public entities and the private sector We are in this for the long haul – we want to provide hundreds of thousands of beds in a sustained infrastructure programme over the long term Over the next decade, we need an ambitious annual build target of tens of thousands of beds every year Solutions 10

11. This is what we are committed to: -Policy and administrative certainty -Good governance, through transparent and accountable structures -Sustained funding for student housing infrastructure development through DHET grants -Sustained funding for financial aid to enable students to pay reasonable rentals for decent, affordable accommodation. This will entail finding the optimal system for the payment of rentals, whether through head leases, direct payments into special purpose vehicles, or other routes -Developing student housing infrastructure on university and college campuses -Requiring new student residences to use green technology and incorporate innovative building technologies -In the process, imparting skills and creating jobs Commitment 11

12. These issues form part of the work the Department is doing in the feasibility studies for the first phase of projects Our solutions must involve a range of funding partners, including the private sector: -Workers’ savings in the form of pensions must help fund decent places for the workers’ children and grandchildren to live while studying -Pension fund trustees and principal officers, we are calling on you to help revolutionise the funding of student housing -Banks, we are calling on you to assess real risks in student housing investments - do not price for imaginary risks and uncertainties -Investors and DFIs, put your long term money into a sure thing – not a single university has ever reneged on a student housing loan, ever -Developers, large and small, we welcome you on condition you genuinely have the interests of students at heart Partnerships 12

13. These simple solutions will enable us to meet our ambitious goals. Our road ahead is clear: -Today we will showcase some of the projects that are ready to be implemented -We will share the details of projects that will be ready within the next six months -Working together with all of our stakeholders, we will devise the structures that need to be put in place to enable the co- operation between stakeholders that will enable this Student Housing Programme to succeed This is an exciting journey, we invite you to join us Way Forward 13

14. Thank You