ATC141024: Report of the Portfolio Committee on Higher Education and Training on its Oversight Visit to the National Student Financial Aid Offices (NSFAS) in Wynberg Dated, 22 October 2014
Higher Education, Science and Innovation
Report
of the Portfolio Committee on Higher Education and Training on its Oversight
Visit to the National Student Financial Aid Offices (NSFAS) in
Wynberg
Dated, 22 October 2014
The Portfolio
Committee on Higher Education and Training, having conducted an oversight visit
to the NSFAS Head Office in
Wynberg
on 17 September
2014, reports as follows:
1.
Introduction
In line with its
programme for the second term, the Portfolio Committee conducted an oversight
visit to the NSFAS Head Office in
Wynberg
on 17
September 2014. This report provides a brief summary of the presentation made
by NSFAS which focused on the student-centred model. Furthermore, the report
includes the observations and recommendations made by the members.
2.
Background and purpose
The
National Student Financial Aid Scheme (NSFAS) was established in terms of the
National Students Financial Act, No 56 of 1999 and was mandated to provide
financial assistance in the form of loans and bursaries to eligible students
enrolled in full-time study programmes at public higher education institutions
and Technical and Vocational Education and Training (TVET) colleges. It was a
conversion of the Tertiary Education Fund of South Africa (TEFSA), a section 21
no-for-profit company which was a public lender to historically disadvantaged
students. The government conceptualised NSFAS as a loan and bursary scheme in
order to address the rising student debt problem in higher education
institutions (HEIs) and to give effect to the government's commitment to
redressing the inequities of the past.
In
June 2009, the Minister of Higher Education and Training appointed a
Ministerial Committee to assess the strengths and shortcomings of NSFAS and to
advise the Minister on the short, medium and long-term needs for student
financial aid to promote the twin goals of equity of access and providing free
undergraduate education to students from working class and poor communities who
cannot afford further or higher education. The Review Committees findings were,
among others; the NSFAS loan administration has being criticised as low,
cumbersome and inefficient; lack of uniformity across institutions of higher
learning and Technical and Vocational Education and Training colleges on the
administration of the NSFAS function, leading to huge imbalances across
institutions in how NSFAS is accessed and experienced by different students in
different institutions; the processing of NSFAS loan applications and
agreements by financial aid officers employed by and therefore accountable to
institutions posed a serious challenge in the sense that NSFAS does not have a
direct relationship with the students to whom it lends money and students do
not have direct contact with the entity from which they borrow money until they
have exited the system, this makes it difficult for NSFAS to recover loans and
replenish the pool of funds, and that the
returning students have to reapply for new loans every year which is
unnecessary administrative burden.
The
Review Committee recommended that NSFAS develops and implement a student
centred model (SCM), an electronic loan system that will ensure that funding
follows the student instead of the institution. The aim of the new system is to
eliminate delays in the disbursements of funds to students and institutions and
to prevent the use of fraudulent documents by ineligible students to access
financial aid. The first pilot of the new SCM was implemented from January 2014
in 12 institutions (7 universities and 5 TVET colleges).
As
part of its in-year monitoring, the Portfolio Committee resolved to visit the
offices NSFAS to receive a briefing on the new SCM and to see how the model
works.
3.
Methodology
The Portfolio
Committee received presentations from heads of different programmes of NSFAS
followed by the discussions and responses. At the end of the briefing session,
the Portfolio Committee conducted a tour of the NSFAS offices.
4.
List of delegation
4.1 Portfolio Committee on Higher
Education and Training
Present:
Mr D Kekana (ANC) Whip, Ms J Kilian (ANC), Ms
S
Mchunu
(ANC), Ms M
Nkadimeng
(ANC), Ms Y
Phosa
(ANC) Chairperson, Mr E
Siwela
(ANC), Prof B
Bozzoli
(DA)
and Mr S
Mbatha
(EFF).
4.2 Parliamentary support staff
Mr A Kabingesi: Committee Secretary, Ms M Modiba: Content Advisor, Ms T
Majone
: Committee Assistant, Mr L
Komle
:
Researcher and Ms N
Magazi
: Executive Secretary
4.3 National Student
Financial Scheme
Mr Z
Sogayise
: Chairperson, Mr M Burger: Board
Member, Mr M
Daca
: Chief Executive Officer, Ms X
Peter: Chief Executive Officer, Mr L
Nage
: Chief
Financial Officer, Mr R Mackinnon-Little: Technical Programme Manager, Mr X
Mkungeki
: Loans and Bursaries Process Specialist, Mr C
Raphoto
: General Manager Corporate Services, Ms M
Mogorosi
: Personal Assistant to the CEO and Ms I
Madindi
: Executive
Assitant
Stakeholder Engagement.
4.4 Department of
Higher Education and Training
Dr
D Parker: Acting Deputy Director-General University Education, Ms T
Futshane
: Chief Director Vocational and Continuing
Education and Training, Ms P Whittle: Director, Ms C
Khambako
:
Deputy Director Bursary Unit, Ms N
Rasmeni
:
Parliamentary Liaison Officer (PLO) Ministry, Mr S Mlangeni: PLO Office of the
Deputy Minister, Ms P
Sekgobela
: PLO Office of the
Director-General and Ms B November: Intern.
4.5 Other guests:
Mr
P Newman: Parliamentary Researcher
Nehawu
.
5. Summary of the presentation
5.1
Student centred-model
The Chief Executive
Officer of NSFAS, Mr M
Daca
led the presentation and gave
a brief background of NSFAS including its mandate in terms of the NSFAS Act (56
of 1999). He noted that in 2014, NSFAS will spend R9
,2
billion to assist 450 000 students at 25 public universities and 50 Technical
and Vocational Education and Training (TVET) colleges on 320 campuses in 9
provinces in South Africa. In outlining student financial aid in context, he
noted that NSFAS is the biggest funder in the market for funding post-school
education and, the total funds for loans and bursaries for the 2014 academic
year is R9
,2
billion. In comparison, commercial banks
and education credit companies provide R3
,3
billion a
year. Concerning the growth of the entity, he alluded that NSFAS has disbursed
more than R41
,5
billion in loans and bursaries to over
1,4 million students and, there has been exponential growth in funds for
student financial aid from R441 million in 1999 to R9,2 billion in 2014. The
CEO made a comparison of NSFAS loans with loans offered by commercial banks.
The interest charged by loans from commercial banks is 10
,25
%
as compared to 4,4% charged by NSFAS. He emphasised that despite the growth in
funds, NSFAS is unable to assist all needy students.
In relation to the fundraising
framework of NSFAS, Mr L
Nage
: Chief Financial
Officer noted that the strategic objectives of NSFAS is to raise new funding
for undergraduate study and to maximise recovery of outstanding loans from all
eligible debtors employed. He further alluded to the fact that NSFAS is in the
process of identifying new funders in the public and private sector for
students currently eligible in terms of the NSFAS means test and students
currently not eligible in terms of the NSFAS means test the missing middle.
Furthermore, the CFO noted that engagements with the Public Investment
Corporation (PIC) were underway on models for a missing middle funding
instrument.
Mr R
Mackinnon-Little: Technical Programme Manager of NSFAS provided a brief
background of the student-centred model. He noted that the previous model was
deeply flawed and applications through Financial Aid Offices (FAOs) were not
controlled by NSFAS. He highlighted the fact that NSFAS has never had a direct
relationship with students with the old model and, this made it difficult to
recover loans.
The benefits of the
student-centred model were summarised as follows:
·
Automated means test, checked against
government databases;
·
Standardised process and no loan agreement
forms;
·
Alignment with admissions and registrations
processes;
·
Fraud detection and prevention;
·
Improved governance through new systems;
·
Funding reaches intended beneficiaries;
·
Students know funding status before
registration and they apply once for a course of study;
·
Students allowances are paid within 48 hours
of signing a loan agreement; and
·
Ability to raise and manage additional funds
for student financial aid.
The challenges of the
student-centred model were summarised follows:
·
High dependency on accurate student and
institutional data;
·
Dates where data or action is required,
particularly for funder selected bursary student, need to be aligned to
academic calendar;
·
Inadequate process to facilitate walk-ins and
late registrations at TVET colleges;
·
Insufficient funds at the beginning of the
academic year and students are funded through the loan recoveries, and
·
Funders like Funza Lushaka delay to confirm
the number of students to be funded.
Concerning the
organisational structure and capacity, the increase in personnel staff was 106%
(145 positions in 2012 299 positions in 2014). The significant growth in the
number of position emanated from the demand for human resource capacity to
manage the new system.
6.
Office tour
The Portfolio
Committee was informed during the office tour that the present NSFAS premises
were leased since the old premises did not have adequate space to accommodate
the growth in human resource. The tour of the premises included a visit to;
human resource unit, call centre, documentation unit, communications unit and
information technology unit. The premises were found to be conducive for
working and had sufficient space to accommodate the current staff complement.
The Committee Members also saw data capturers processing loan agreements of
students which raised a concern regarding delays in the transfer of funds to
students and institutions.
7.
Observations
The following formed
part of the key observations:
7.1 Human Resource Management
The Portfolio
Committee was concerned with the significant growth of human resource capacity
as the core mandate of NSFAS is to distribute loans and bursaries to students.
The total staff complement in 2014 is 299 staff as compared to 145 in 2012.
7.2 Loan
administration
The Portfolio
Committee expressed its concern with the late payment of claims submitted by
higher education and training institutions to NSFAS as this impact negatively
on both students and institutions.
7.3 Loan recovery
It emerged that NSFAS
is owed more than R2 billion by its eligible debtors and the loan recovery
systems implemented by the entity are slow and ineffective. The Portfolio
Committee noted that NSFAS has a serious budget shortfall and more emphasis
should be placed on recovering debts owed by former student to supplement the
budget shortfall.
7.4 Student-centred
model
The Portfolio
Committee commended the efforts put by NSFAS in developing the new model aimed
at improving the management and distribution of student loans and bursaries to
needy students. Nonetheless, members were concerned that most of the challenges
highlighted by NSFAS with the new model were not coming from students.
Furthermore, it was noted that students from rural areas particularly those
coming from no-fee schools will find it challenging to make use of the new
model using sophisticated technology through mobile phones.
7.5 Budget
Despite the increase
in funding from R440 million in 1999 to R9 billion in 2014, the demand for
financial aid exceeds the current supply. The Portfolio Committee is concerned
that 50% of eligible students were unfunded by NSFAS owing to inadequate budget.
The increase in student protests across higher education institutions even
where the new model is piloted was highlighted as a major threat to stability
in higher education. Furthermore, the new model does not make provision for top
slicing and this infuriated some needy students as they are not funded for the
2014 academic year particularly in institutions where the new model is piloted.
8.
Summary
The visit by the
Portfolio Committee took place after the Minister recently visited the new
NSFAS Head Office and, the purpose of the visit was mainly to assess the
strengths and shortcomings of the student-centred model which is being piloted at
seven higher education institution and five TVET colleges. The implementation
of the student-centred model emanated from the recommendations by the
Ministerial Committee on Review of NSFAS Report and, NSFAS informed the
Portfolio Committee that 80% of the recommendations in this report were
implemented.
The student-centred
model was launched to deal with longstanding inefficiencies in the awarding and
administration of loans and bursaries by NSFAS. Under the old model, financial
needy students intending to study at any public higher education institution or
TVET college have to apply for financial aid at the institution they wish to
attend. These institutions make the decision about awarding of loans and
bursaries to students that pass the means test. The awarding of loans and
bursaries by universities and TVET colleges has been overwhelmed with many
problems over the years such as poor administration and inability by these
institutions to conform to government policies. Under the old model, some
institutions demanded poor students to pay upfront fees before they can be
registered and students had to reapply for funding annually though they have
passed the means test. The old model will be phased out in the next four years.
Government allocated
R98 million to NSFAS to roll out the new student-centred model at seven
universities and five TVET colleges across the country, excluding human
resource required for the new system. The new system will make provision for
students to apply online directly to NSFAS and those who have no access to
internet will submit an application form that will be made available at Post
Offices all over the country. The main advantage of the new model is that NSFAS
will have a relationship with the student which will make it easier to recover
the loan after the student has graduated. Furthermore, NSFAS will pay
allowances for food, books, transport and accommodation directly to students
through the
sBux
voucher system. Students will use
their mobile phones to access their accounts and pay the procured service
providers without spending their airtime. The
sBux
voucher
system will prevent fraud and corruption by students by ensuring that funds are
used for the purpose intended for.
Despite the new effective
measures introduced by the new model, it has some shortcomings that need to be
addressed before the full roll out is implemented by 2020. The current budget
shortfall of NSFAS will result in many students not being funded since the new
model has no provision for top slicing like the old model. The high dependency
on accurate student and institutional data is a serious challenge for some
universities and TVET colleges who do not have adequate information technology
capacity. The reliance of the new model on mobile phones for students to access
and pay their accounts may be a disadvantage especially for students coming
from disadvantaged backgrounds. Inadequate network coverage in remote rural
areas might impact negatively on students who want to access their accounts.
9.
Recommendations
The Portfolio
Committee having considered the student-centred model of NSFAS; recommends the
following:
9.1 Budget
NSFAS should engage
on a robust fund raising framework particularly with the private sector to
increase its sources of funding and to
raise
more
funding for undergraduate programmes. The department should explore the possibility
of providing additional funding to cover the current budget shortfall of NSFAS
before the new model is fully implemented in all public higher education and
training institutions.
9.2 Loan recovery
The current value of
the NSFAS loan book is very high and a comprehensive loan recovery strategy
should be explored to maximise recovery of outstanding loans from eligible
debtors employed in both the private and public sector.
9.3 Student-centred
model
The current
shortcomings of the new model should be addressed by NSFAS as a matter of
urgency before the old model is phased out within the next four years.
Furthermore, more emphasis should be placed on improving the administration of
the new model than employing more staff personnel. The new model should be
linked with the Central Application Service (CAS) of the department so that the
application process to higher education and training institutions is effective
and efficient.
9.4 Loan
administration
The Portfolio
Committee strongly recommends for the processing of outstanding claims
submitted by higher education and training institutions to NSFAS before the end
of the academic year to prevent recurrence of student protests.
9.5 Bursary
administration
Consultations with
funding partners particularly the Department of Basic Educations Funza Lushaka
Bursary should be made so that the selection process of students is completed
earlier in the academic year so that students can be assisted effectively.
9.6 Communication
strategy
The Portfolio
Committee recommends that NSFAS be clearly visible and accessible to the public
in particular the head office. A massive advocacy campaign for the
student-centred model should be rolled out to inform learners particularly from
rural areas of the existence of this model.
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