Ministerial Committee Review of National Student Financial Aid Scheme: briefing by Minister Higher Education and Training

Briefing

15 Mar 2010

The Minister of Higher Education and Training, Dr Blade Nzimande, briefed the media on the report of the Ministerial Review Committee regarding the review of the National Student Financial Aid Scheme (NSFAS).

Minutes

Q: What proportion of students has dropped out because of affordability issues? If you assess the fund, it was almost throwing money away in the sense that it was funding individuals who then had to drop out. How much of the provided funds had been fitting with the target?

 

A: Dr Blade Nzimande, Minister Higher Education and Training, replied that this information was contained in the report. A third of NSFAS funded students actually dropped out. The report had highlighted that a third of NSFAS funded students actually dropped from tertiary institutions. It was difficult to single out the factors behind dropouts. The issue of affordability was a major contributory factor. If the issue of the shortfall would be addressed, then the success rate of NSFAS would drastically improve.

 

Professor Marcus Balintulo. Chairperson of the Review Committee, added that attrition and dropouts were a function of a variety of factors. 33% of students who had benefited from the scheme were still registered. Of the 67% who had left the scheme, 28% had completed the scheme and 72% had dropped out of the system. This was why in all the recommendations that the Committee had made; full funding for students who qualified for financial aid was highlighted.

 

Q: The issues raised on page 128 under 10.3.4.3 c of the Report suggested that a single model of funding should be adopted across all the universities; does this not mean that one would end up with universities differing in their fee structures and some students not being able to study at certain universities altogether?

 

A: Prof Balintulo replied that the Committee had grappled with this challenge. The allocation of funds at institutions was based on the racial demographic profile of the institution and the cost of study. One of the Committee’s recommendations was a move away from using race as a proxy for need. The fee structure system at universities was very unequal. Full funding based on the cost of study would not solve the problem, it would in fact perpetuate the system and some students would have access to more funds than others. There had to be a common level of funding. The institutions that charged higher fees had to make sure that students were not in a position where they had to find extra money to be able to register and progress. The differentials of the resource bases of universities were too huge.

 

The Minister said that the Committee was dealing with a dilemma about whether a full loan/bursary should be offered to fewer numbers of students or smaller grants to a wider group. This tension did not address the issue of socio-economic conditions. The Department would have to make proposals to Cabinet on how equitable distribution would be ensured.

 

Q: The greater good must be that as many people as possible should study. The problem lies in the law of unforeseen consequences. It is important that you’re not going to end up with a situation where the differentiation between institutions and fields of study would not be taken into consideration if this one size fits all model would be used. Page 132 looks at physical infrastructure; there is a recommendation that there should be a head office in Pretoria and four regional offices. It is important that in a structure like this you would want to keep your administration costs as low as possible so that as much of the money could be allocated to students, are you not defeating that objective with the creation of this structure?

 

A: The Minister conceded that the Department had to be careful that it did not have a one size fits all model. This matter could not be dealt with completely without looking at the funding formula in its entirety. The Department should also look at creating opportunities at post school level. A post school system that was diverse and able to offer opportunities was also needed. A system that privileged university education above all else had been inherited.

 

Prof Balintulo believed that the recommendations in the report should pre-suppose the review of the funding formula. The recommendation of the structural set up should be read in conjunction with the other recommendations in the report. A further consideration was that the head office should probably be closer to the Department in terms of its functioning. This should be seen in the context of regional offices.

 

Q: The Minister’s statement says that there are some matters arising from the recommendations that require immediate attention, please expand on this. The Minister’s whole statement does not refer to Further Education and Training colleges (FET’s), could you talk a little bit more on FET colleges and scarce skills?

 

Q: The recommendations look very expensive; can the state afford this? Would the Department look at a situation for universities to come on board and then say to them that when you increase fees you should consider whether the state can afford this? When the report was complied did the Committee consider at what stage parental support came into play. It seems like a large chunk of parents are being absolved of paying for their children’s fees.

 

A: The Minister replied that the majority of the students came from very poor families, in some cases there were no breadwinners. Another question would be where does state responsibility start and end. The issue of whether the State could afford this was a matter for the Cabinet to grapple with. Sometimes affordability was determined by what had been prioritised? The Department had already started to do some groundwork before the final version of the report was released. The report did in fact contain recommendations on FET colleges.

 

Prof Balintulo replied that the question of parental responsibility had to be grounded contextually. The present scheme always included parental responsibility. The rise of student debt at various universities was directly related to the catchment area of these universities. A lot of parents could not afford this contribution so much so that the up front registration policy fee was abandoned a couple of years ago. If access to higher education was frozen and linked directly to class differentials then there would be big trouble.

 

Ms Mary Metcalf, Director-General, Department of Higher Education, added that the Committee recommended full state subsidisation of students in the FET sector. The Committee correctly anticipated an expansion of this sector. Currently, the policy framework linked funding to programmes and enrolment planning was linked to programme funding. The diversification of programmes offered in this sector was being investigated.

 

Ms Kirti Menon, Acting Deputy Director General: Universities, Department of Higher Education, added that chapter 9 of the report contained most of the recommendations that were made concerning FET colleges. The report made an important link between higher education and education more broadly. It focused on how the Department quantified its rate of return for the public, private and societal good. A projected rate of 17% participation in higher education whilst assuming a 14% figure of currently funded students would be R5.2 billion in 2010 for full subsidised funding. This was an attempt to work out the kind of funding that was required.

 

Q: Is the current loan recovery practice not working and how much is owed to NSFAS by working graduates?

 

A: Ms Metcalf responded that the policies and practices needed to be reviewed and developed within a legislative environment. NSFAS was built on the practices of its predecessors, which were carried forward. In the interim the credit regulations had amendments. Work had already begun on the constitution of the loan book and how it would be revised in light of a better understanding of the National Credit Act.

 

A: The Minister replied that the amount owed was part of the work around the loan book. There was no precise answer at the moment. One could only talk about the range, which was R6 – R10 billion. The Committee had found that some of the loans were not recoverable and some were prescribed in terms of the law. Those who were supposed to be paying should still pay.

 

Q: Students coming from very poor backgrounds were required to find money from somewhere in order to register, during the review process did the Committee find any clause that said that they should find their own money for registration and if not then why did some of the universities insist on continuing with this practice?

 

A: Prof Balintulo replied that the previous Minister had written to all institutions and instructed them to allow students who would qualify for NSFAS funding to register. The Minister did not have to repeal any law to make this determination. There was the reality that some students were given money to register and they spent it on other things. Perhaps the universities had felt that an opportunity to get registration fees had been lost. The extent of student debt was an indication of an inability to pay fees.

 

The Minister added that the Department had set up a small registration task team and it was not happy with some of its findings. In some instances, institutions were insisting on cash payments only. One of the things that the system would have to address was proper alignment with institutions. This was one of the issues that the Department would have to discuss with all institutions. There was a lot that could be done to make the start of the academic year a smoother one.

 

Media Statement by Higher Education and Training Minister Dr Blade Nzimande on the release of the Ministerial Committee Review of the National Student Financial Aid Scheme

In June 2009, I appointed a Ministerial Committee led by Professor Marcus Balintulo to review the National Student Financial Aid Scheme (NSFAS). The review was prompted by several challenges related to the important goals of access and affordability.  The review focused on a specific set of terms of reference which included a focus on the administrative capacity of NSFAS which had not kept pace with growth in terms of the size of the state’s investment in financial aid. It represented a tenfold increase in the NSFAS budget between 1999 and 2010. In addition, there were several areas ranging from concerns regarding the growing number of blacklisted borrowers, the urgent need to assess short, medium and long term growth requirements of the fund to increase access, particularly of poor students and in addition there was the imperative to review the distribution and allocation policies and mechanisms of the fund. This report by the Committee is now complete and has now been submitted to the DHET for consideration.  

The scope of the review mandated the Committee to assess the strengths and shortcomings of the current scheme 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 terms of reference requested the Committee to:

   Assess the strengths and shortcomings of the current NSFAS.

   Conduct a needs analysis of students who will require financial aid in the short, medium and long terms, taking into account the government's commitment to providing free undergraduate education to students from poor families who would otherwise not be able to pursue further or higher education.

   Undertake a review of the means test and provide guidelines to determine the criteria for eligible students.

   Make recommendations on appropriate mechanisms for raising and administering the required funds, including the parameters of the recapitalisation of NSFAS and for the possible establishment of a student loan bank.

   Investigate the feasibility of student financial aid being linked to priority fields of study and levels of academic performance.

   Assess the viability of extending financial aid to students in not-for-profit private higher education institutions (HEIs).

   Assess the nature and extent of former and current students blacklisted by NSFAS and universities and recommend appropriate action to be taken to deal with the problem.

   Recommend changes to the policy, regulations and operational framework of the NSFAS, including the distribution formula for the allocation of financial aid to institutions, the means test, the respective roles and the responsibilities of the institutional financial aid bureaus and the NSFAS.

   Recommend changes to the governance, management, operational capacity and systems of the NSFAS to meet the needs of the new policy framework

 

The report focuses on aspects related to the governance, administration and management of the NSFAS and more critically, on the policies, systems, structures and regulations that govern the scheme. The recommendations pertain to both the higher education sector and the further education sector. Some of the committee’s key findings show that the amount of NSFAS funding available falls far short of demand and that there are significant gaps between the NSFAS award and the full cost of study for many students.  This underfunding is a contributing factor to the high attrition rate in our university system. The report highlights the need for the DHET to revisit the access and success debate and makes several proposals in this regard. In addition, there are many families who cannot afford higher education but whose income is above the threshold of R122 000. This is referred to by the Committee as the ‘missing middle’.  There furthermore is a definite need to strengthen the capacity of loan administration at NSFAS but also in financial aid offices.

The Committee made a number of recommendations, which include:

       the development of a comprehensive policy framework to articulate the detail of the national policy imperative of progressively providing free higher and further education to the poor.

         the strengthening of governance and administration of NSFAS

         simplifying the means test as well as the institutional allocation formula

         reviewing the NSFAS loan recovery practices

         a review of funding of higher education and the link to the rising cost of study at institutions

         the inter-relationship between access, affordability and success

         an audit of the NSFAS loan book

         practices of loan recovery to be compliant with legislation and the Constitution and;

         finding a solution for the “missing middle”.

The full list of recommendations can be found on page 124 in Chapter 10 of the report.

I wish to acknowledge the difficult task of the Board of NSFAS over the years, particularly as members do this on a voluntary basis. I thank them for their work. It is my fervent hope that the recommendations of the committee leads to the strengthening and improved functioning of the Board.

The Review Committee has now completed its work and I would like to extend my heartfelt appreciation to Professor Balintulo and his team for the intensive work they undertook during the review, including an extensive consultation process with stakeholders as well as the commissioning of several research pieces which have informed the study.   I believe that the comprehensive report they produced will serve as a valuable reference point  as we pursue our mission to ensure that no poor, academically deserving student is denied access to higher education, and that the operations of the fund are efficient and effective.

There is considerable public interest in this review as there are many thousands of young people in our country who are dependent on financial aid to access higher education. We value the voices of all these people as well as our stakeholders. The process that will be followed now that the report has been received is that we release it today for public comment and invite all interested parties to engage on the findings and recommendations. This process of engagement and consultation will assist us as we study and prepare our response to the report.

We have presented the summary of findings and recommendations of the committee to Cabinet last month and I will report on our final response, including recommendations and an implementation plan, to Cabinet once we have concluded the period of public consultation. Our intention is to take the matter before Cabinet by the end of August.

There are, however, some matters which arising from the recommendations requires our immediate attention. These include simplifying the means test to uniformly be applied at all institutions; revisiting the institutional allocation model, reviewing the funding formula and framework for universities; commissioning research into the inter-relationship between affordability, access and success; and the appointment of a task team to look into several recommendations by the Committee on loan recovery by the South African Revenue Service and solutions for the ‘missing middle’. These issues will be acted on urgently.

This is the first step taken by government to realise the commitment of the ruling party to “progressively introduce free education for the poor until undergraduate level”. The review of the NSFAS was undertaken in fulfilment of the resolution of the governing party to “encourage students from working class and poor communities to go to tertiary institutions by reviewing and improving the National Student Financial Aid Scheme”.

Electronic copies can be viewed and downloaded from the Department of Higher Education and Training’s web site from tomorrow, 17 March 2010. To access this, go to www.education.gov.za on the homepage under “What's New”. All interested persons and organisations are invited to comment on the Committee Report in writing and to direct their comments to:

The Director-General; Private Bag X895; Pretoria; 0001 – for attention: J Cedras, Tel 012 312 5207; email cedras.j@doe.gov.za; or fax 012 323 7532.

Comments must reach the Director-General on or before 30 April 2010.

 

Issued by Ranjeni Munusamy

Head of Communications

Ministry of Higher Education and Training

Tel: 012-3125555 (PTA)

          021-4655513 (CT)

Cell: 0828986082

email: munusamy.r@doe.gov.za

 

 

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