Demographic Characteristics of UYDF students and graduates 1999-2017
This section presents data on students supported by UYDF who were registered in full-time studies in universities, and the total number of HCP graduates from the start of the UYDF up to 2017. This second group includes those who had completed their year by year work back obligation periods and those who had not, those who had joined the private sector or specialized and started their own private practices as well as those who have died since graduation.
Students and graduates from 1999-2017
Since 1999, a total of 335 health science students of rural origin have graduated while being supported by UYDF. Of this total, 113 are medical Doctors. The programme expanded from one hospital in 1999 to 15 hospitals in KwaZulu-Natal province and two hospitals in the Eastern Cape Province by 2015. Student numbers of those supported annually increased from 4 in 1999 to 254 in 2017.9,21 The average annual university pass rate over the past five years has been 92% even though the schools in rural areas are generally under-resourced, and this success is probably a result of the mentoring programme. This demonstrates that the shortages of healthcare professionals at rural hospitals are being addressed in the sub-districts where the UYDF is active. Furthermore, 63% of the graduates who have completed their work back obligations, are still working in rural hospitals and a further 6% are working for rural non-profit organizations, indicating a high retention rate of HCPs in the area.
Figure 2 shows the gradual increase in the number of graduates and a jump from four students in 1999 to nearly 350 graduates in 2019 (not shown in this Figure). This suggests that if the funding had increased tenfold, this could have produced 3500 graduates to date, a number which could ease the shortage of health care professionals in the country. Other locally based NPOs have also supported students and some HCPs are being trained abroad in Cuba, Indian, China, Europe and America 10, but the unique advantage of the UYDF model is that it provides a sustainable retention strategy for HCPs in rural areas.
Analyses of the potential costs and benefits of the UYDF approach
In order to examine the financial benefits that the UYDF generates from expenditure on each student at university to graduation, the potential benefits of the UYDF programme to the economy were examined in two scenarios. In the first instance the impact of raising the throughput rates for the students in the UYDF programme was estimated, assuming that pass rates were comparable to the national average. In the second scenario, the UYDF throughput rates were applied to the national student numbers. Total costs, lifetime earnings and the net present value of investments were calculated in order to estimate the average benefit of a bursary provided by the UYDF.
Average cost of the UYDF bursary
In the period 2009 to 2015, the UYDF provided approximately 166 bursaries a year. The estimated annual cost of these bursaries was R17m (Table 1 and Figure 3). About 75% of the total cost was spent on education support, 15% on administration and 8% on mentorship.
Table 1. Total and average annual costs of supporting students, ZAR (2015 prices)
Cost centre
|
Total cost
|
Cost per student
|
Percent
|
Recruitment
|
109,821
|
663
|
0.6%
|
Education support
|
13,022,407
|
78,583
|
77.0%
|
Mentorship
|
1,221,051
|
7,368
|
7.2%
|
Post graduate support
|
101,842
|
615
|
0.6%
|
Administration and overheads
|
2,273,861
|
13,722
|
13.5%
|
Capital costs
|
176,301
|
1,064
|
1.0%
|
Estimated cost per year
|
16,905,283
|
102,015
|
100.0%
|
The UYDF supports students of medicine and allied health science disciplines. Money is spent annually on recruitment of new students, students’ books, meals, administration fees, post-graduate support and on the mentorship of students at traditional academic universities and universities of technology in South Africa (see Figure 3).
The cost of accommodation varied greatly for students, depending on where the university was situated and, in some cases, was equal to or more than the cost of university fees. The fee structure also differed across universities and disciplines.
Return on investment
A total of 254 graduates had been supported by the UYDF scheme (2009 – 2015). The total cost of training these graduates was estimated to be R186 million (Table 2). Table 2 below is calculated on the assumption that these personnel would remain in their respective professions for the remainder of their working lives, but not necessarily in the same rural area. Some of the medical staff would specialise and perhaps move to a tertiary hospital, where they would serve the broader community. Some might transfer to private practice, but it is unlikely that any will leave the health system entirely, and some are likely to remain in their rural areas.
These graduates are expected to generate an estimated R15 billion in lifetime earnings, which would be equal to R4 billion at current prices (2019). A weakness of the calculations in Table 2 is that it is impossible to calculate what the graduates would have earned without their university qualification. The IRR is 63%, higher than the interest rates on commercial bank loans, showing that the UYDF is a highly efficient programme.4 For example, the types of IRR’s that would be considered satisfactory in commercial settings might be 10% for acquisition of a stabilized asset, 15% for acquisition and repositioning of an ailing asset, 20% for development in established areas and 35% for development in an outstanding unproven area.
Table 2. Costs- benefits of UYDF graduates, ZAR (2015 prices)1
|
Disciplines
|
Graduates
|
Total cost
|
Lifetime earnings
|
NPV
|
IRR
|
1
|
Occupational Therapy
|
5
|
3,384,293
|
198,093,126
|
56,732,609
|
46%
|
2
|
Radiography
|
20
|
13,537,171
|
798,263,387
|
228,617,547
|
46%
|
3
|
Pharmacy
|
19
|
12,860,312
|
1,497,155,785
|
428,775,876
|
86%
|
4
|
Biomedical Technology
|
14
|
8,047,815
|
542,987,675
|
155,508,210
|
52%
|
5
|
Nursing
|
32
|
21,659,474
|
980,647,587
|
280,851,220
|
37%
|
6
|
Physiotherapy
|
20
|
13,537,171
|
798,263,387
|
228,617,547
|
46%
|
7
|
Medicine
|
79
|
69,590,138
|
7,539,302,053
|
2,159,208,063
|
81%
|
8
|
Dental Therapy
|
9
|
5,173,595
|
329,530,887
|
94,375,546
|
50%
|
9
|
Dietetics
|
8
|
5,414,868
|
320,499,764
|
91,789,090
|
46%
|
10
|
Optometry
|
12
|
8,122,303
|
479,754,305
|
137,398,576
|
46%
|
11
|
Speech Therapy
|
8
|
5,414,868
|
320,499,764
|
91,789,090
|
46%
|
12
|
Social Work
|
14
|
9,476,020
|
431,033,007
|
123,445,106
|
37%
|
13
|
Psychology
|
7
|
4,738,010
|
578,601,746
|
165,707,853
|
90%
|
14
|
Environmental Health
|
1
|
676,859
|
39,980,080
|
11,450,040
|
46%
|
15
|
Nutrition
|
1
|
676,859
|
41,804,317
|
11,972,490
|
48%
|
16
|
Clinical Associate
|
1
|
574,844
|
37,667,577
|
10,787,754
|
51%
|
17
|
Dentistry
|
4
|
3,115,493
|
380,556,795
|
108,989,041
|
90%
|
|
Total
|
254
|
186,000,091
|
15,314,641,244
|
4,387,131,017
|
63%
|
To calculate the present value of the future income, the research team assumed that 20-30% of this will be paid in tax, then the present value of future tax is R4 Billion and this would more than pay for the programme. Had beneficiaries not been involved in the programme they would have nonetheless gone on to work and pay taxes. It is unlikely, however, that if we were able to consider their earnings, without these qualifications, that they would be sufficiently high to change the conclusion that this programme will pay for itself.
Given that once the graduates are working as qualified professionals, they will pay a significant amount of tax over their lifetimes (20–30%, estimated here as R4 billion), the costs of the UYDF investment will be paid for several times over as shown in Figure 4. Thus, the money spent on a student can be viewed as an investment and not an expense. The returns from each individual graduate including their taxes and the private practices of those who specialise and open their own surgeries and other things are the good returns on investment.
Definitions
NPV is the acronym for net present value. Net present value is a calculation that compares the amount invested today to the present value of the future cash receipts from the investment. In other words, the amount invested is compared to the future cash amounts after they are discounted by a specified rate of return.11
Internal rate of return (IRR) is the "annualized effective compounded return rate" or rate of return that makes the net present value of all cash flows from a particular investment equal to zero, in other words, the rate at which an investment break even. It is used in capital budgeting to measure and compare the profitability of investments. This excludes external factors such as inflation.11
The return on investment for UYDF graduates is presented in the following sections based on the calculations made for each of the cases. First the costs and benefits of the mentoring programme and secondly the UYDF model is extrapolated to the national scale.
Costs and benefits of the mentoring programme
The UYDF has been successful in assisting many underprivileged youths to graduate from university, achieving a pass rate of 93% in the last four years. In comparison, the throughput rates for undergraduate students in South African Universities are quite low. A Department of Higher Education and Training (DHET) report 12, which followed cohorts of first-time undergraduate entrants between 2000 and 2008 showed that in the 2008 cohort, the throughput rates were 42% after four years and 61% after 6 years.
This shows that the low throughput rate in the system could be quite costly. The UYDF model provides an example of how these losses can be minimised. The pass rate achieved by UYDF-supported students has been mainly attributed to the UYDF mentorship programme, which provides students with sufficient support to enable them to cope with both the academic and social pressure. The potential loss associated with non-graduating and failing students was estimated by applying the throughput rates provided in the DHET report to the UYDF cohort of 254 graduates: assuming pass rates of 19% after three years, 42% after four years and 61% in year six.
In the analysis provided in Table 3, if the pass rates are adjusted according to the DHET throughput rates, this would imply that only 114 students would have graduated (about 45% of the 254 cohort). Thus, instead of the potential lifetime earnings of R15 billion estimated in Table 2, society would only realise R7.7 billion (or R2 billion instead of R4 billion at today’s prices).
Table 3. Analysis applying DHET pass rates to UYDF graduates
|
Graduates
|
Total cost
|
Lifetime earnings
|
NPV
|
Occupational Therapy
|
2
|
1,184,502
|
70,607,451
|
20,221,524
|
Radiography
|
7
|
4,738,010
|
280,686,129
|
80,386,719
|
Pharmacy
|
7
|
4,501,109
|
526,558,727
|
150,803,064
|
Biomedical Technology
|
5
|
2,816,735
|
191,301,708
|
54,787,590
|
Nursing
|
11
|
7,580,816
|
344,221,072
|
98,582,721
|
Physiotherapy
|
7
|
4,738,010
|
280,686,129
|
80,386,719
|
Medicine
|
51
|
45,233,590
|
4,902,215,377
|
1,403,963,244
|
Dental Therapy
|
3
|
1,810,758
|
116,519,209
|
33,370,359
|
Dietetics
|
3
|
1,895,204
|
113,468,861
|
32,496,759
|
Optometry
|
4
|
2,842,806
|
169,207,950
|
48,460,079
|
Speech Therapy
|
3
|
1,895,204
|
113,468,861
|
32,496,759
|
Social Work
|
5
|
3,316,607
|
151,858,604
|
43,491,336
|
Psychology
|
2
|
1,658,303
|
205,177,924
|
58,761,650
|
Environmental Health
|
0
|
-
|
-
|
-
|
Nutrition
|
0
|
-
|
-
|
-
|
Clinical Associate
|
0
|
-
|
-
|
-
|
Dentistry
|
3
|
1,947,183
|
239,609,834
|
68,622,729
|
Total
|
114
|
86,158,838
|
7,705,587,834
|
2,206,831,251
|
The costs were estimated in Rands [ZAR] (31 October 2019) and the exchange rate used is R= US $ (R15.105 = 1 US $)
The potential losses are not only in terms of the lifetime earnings (benefits), but also ‘wastage’ of resources that could be spent on supporting students who succeed at university and graduate. In Table 3, a total of 140 students do not graduate. This translates into approximately R100 million that would have been spent supporting students who do not eventually get their qualifications. This R100 million is the opportunity cost to society, as these resources would have been invested in alternative ventures that could yield some future benefits.
Figure 5 illustrates the potential losses associated with non-graduating students. The net present value is halved to about R2 million and society loses about R7 billion in lifetime earnings at lower student pass and throughput rates. Thus, with an investment of approximately R7 400 in mentorship per annum (about 10% of total education support), the UYDF model can result in substantial saving and ensure a higher future earnings potential.