Social stratification and post-school funding thresholds: A dynamic approach to profiling the missing middle

Questions related to the sustainability of post-school education funding in South Africa, together with issues of expanding access and affordability have been fervently debated over the last decade. In 2018, government announced that the National Student Financial Aid Scheme would fund all eligible post-school students whose household income was R350 000 or less. The Department of Higher Education and Training is now focusing on the “missing middle” – students who come from households whose income is too high to make the R350 000 funding threshold but too low to afford fees. If free education for all students is not viable, a funding instrument that differentiates students according to socio-economic need may be relevant. Guided by the poverty dynamics literature, we argue that a key consideration for how we understand socio-economic need – on both sides of the funding threshold – should reflect the household circumstances that generate economic vulnerability, not only household income at a given point in time. Income mobility is associated with measurable differences in household characteristics that are related to economic vulnerability. In this paper, we conceptualise a stratification schema around the NSFAS funding threshold that is premised on mobility patterns over time as well as current living standards. Household income mobility is estimated using a multivariate probit model that explicitly accounts for endogeneity of initial conditions, unobserved heterogeneity, and non-random panel attrition. Recognising that the majority of post-school enrolment occurs among youth, we then situate this group within our stratification schema. In doing so, we provide a novel input to current discussions about the design of a sustainable, comprehensive, and progressive financial aid scheme.