National Students Financial Aid Scheme Review: progress on implementation of Committee recommendations: briefing by Department of Higher Education & Training

Meeting report

Opening remarks
Ms Kirti Menon, Acting Deputy Director-General: Universities, Department of Higher Education and Training, said that the Department had indicated that many issues were interlinked. When there were changes to policy there should also be legislative and administrative changes and processes within the organisation; different issues were in different junctures within the organisation and were under consideration. This was a work in progress. The report was finalised the previous year and since then there had been several interactions in terms of their process.

Since the inception of the National Student Financial Aid Scheme (NSFAS) in 1999 the organisation grew from managing R 441 million to more than R2.3billion by the beginning of the previous year. That was the first review that was scheduled by the Minister. The purpose of the review had two aspects to assess the strength and short-comings of that current scheme and to provide advice to the Minister on the short, medium and long-term needs of student financial aid. The goal was to promote equity of access and explore free undergraduate education to students from working class and poor communities who could not afford further or higher education.

Department of Higher Education and Training Progress review on Committee report on the National Student Financial Aid Scheme
If one worked on the premise that access to education was the way out of the poverty cycle, a way of making the country work and on the assumption that education was a public good, the funds available were insufficient in terms of the income inequalities of the country. It was clear that the R 3 billion injection into NSFAS would only take the Department a small distance; the road to be travelled was long. The Department had to work with its bid process and it identified two areas – firstly, the extension of 100% bursaries to students at Further Education and Training (FET) colleges who were financially needy, a significant change to the 80% allocation previously. If the Department covered full cost and took into account that the Departments strategic plan and priority was to expand the FET College sector, the Department would be pre-empting drop-outs due to financial reasons. The second aspect was that the universities' funding worked on the basis of input-output theory; money was allocated to the university for the number of students enrolled at the university. When students graduated, a further percentage would have been allocated to the university as a performance incentive. If NSFAS allocated loans to final year students who were financially needy, and they completed their course and qualified to graduate in the year that the loan was granted, then NSFAS would convert the loan of that year into a 100% bursary, that would be an incentive for the students to perform better.

The Department has written a letter to all universities, indicating the plan and model to be followed, so that they would ensure the strengthening in the teaching and learning component so that students progressed academically. NSFAS was determined to ensure that there was no compromise in the teaching and training and universities should work with the Department to ensure the model was successful.

Regarding the progress in terms of the broad recommendations the Department said that the Minister had signaled that the review of the funding and resourcing of the Post-School Education System (PSE) had a link between the development of policies for free education and the funding of the PSE system, that the Department could not investigate one without looking at the other. That had several components as to how to subsidise institutions of learning, and included the FET colleges and universities and how students accessed those institutions. The financial access was extremely critical as the students were financially needy and were the Department was conscious of that. The final year programme for students would be closely monitored by the NSFAS which was required to ensure that it met the outcomes of the programme. For the FET colleges, there were financially needy students who would qualify for bursaries and had been allocated to the N1 and N2 programmes; also changes in the disability fund criteria had been made. There would be amendments to the legislation that would go through and set regulations for NSFAS. The changes would only take place once the legislation had been put in place. The Department was in the process of appointing a new board and was expecting the Minister to make appointments by the first week of April 2011. The Auditor-General could not express an opinion on the annual financial statements of 2009/10 and issued a disclaimer and the Department had been working to rectify the problems that were identified in the audit. The Executive Committee (EXCO) was addressing areas of initial recognition of student loans, interest income and accrual and the impairment of loans.

The Central Applications Process referred to the application for financial aid in order to realise the principle espoused in the Review Report. The models for 2011 had been moved closer in insuring that money followed students where need was expressed. In 2010 the Department put an end to the blacklisting of students and opted for better methods of loan recovery. The means test issue would be prioritised by the board. The unutilised funds had been a major area of concern and the Department had reported to the Portfolio Committees and Parliament about those funds. Since 2009 the Department had been involved in ensuring that the funds were being allocated. The unutilised fund of 2010 would remain because funds were being re-allocated on monthly basis.

The NSFAS only received budget from National Treasury through the Department. NSFAS should be linked to education as a public vote, for which, as much as our country required scarce and critical skills, there would be a system that drove students’ choices towards this, and the Department was exploring means to ensure that the amount required for students financial needs was appropriately managed and did not become a reason for dropping out.

The majority of the recommendations had been worked through. There was a process in place and the Department was convinced that the constant and close monitoring of progress made in line with the recommendations would have significant policy changes for NSFAS by 2011.

Discussion
The Chairperson asked for information about the suspension of the Chief Executive Officer (CEO).

Ms Menon said that the Minister wrote to the Chairperson of the NSFAS and the CEO, requested that, based on the ministerial review, it seemed as though the loan book of NSFAS required a review of how interest was calculated, accrued, how the management system calculated the interest and how it estimated the value of the loan book and the accounting principle used. This issue was to be given top priority and given to him on time. The work reported was not satisfactory and this partially resulted to the disclaimer given by the Auditor-General. Following that, there were several recommendations. Parts of the reason for suspension related to the processes prior and after the disclaimer. Ms Menon said that the CEO was suspended a few weeks ago and she would report once the issue was cleared.

Mr W Faber (DA, Western Cape) asked if Members could have the full Auditor-General's report in order to see the reasons

Mr M de Villiers (DA, Northern Cape) asked what new innovative ways were being taken in order to strengthen the funds. He asked if the Department planned to include the N3 and N4 students for further studies and financial support, and how it was processing the applications of the students’ funds being allocated to the universities as there were problems in universities in handling their financial situations. He asked how the Department safeguarded the loan book documents since the CEO had been suspended.

Ms B Mncube (ANC, Gauteng) asked which recommendations out of the 70 had been approved and asked about the recommendation of the funding of private higher education. She asked what the progress on the establishment was and if there had been a turn of events and if the process was faster than it had begun. She said that blacklisting of unemployed graduates was a barrier for them to get employed. She asked what the circumstances that led to drop-outs were and also how the Department planned to disburse the unutilised funds.

Ms R Rasmeni (ANC, North West) asked what the cause of the drop-outs was and what measures where being put in place to prevent this from occurring. She asked if NSFAS included residential fees. She asked what was being done to apply early to avoid long queues at universities, inform the rural areas of NSFAS and to deal with possible abuse of the system.

Ms D Rantho (ANC, Eastern Cape) asked the Department to be more specific on how they worked with provinces since some did not have universities. She asked if the Department had means put in place to deal with those students and asked how blacklisted students should be managed since some of those students had dropped out because of social reasons or problems at home.

The Chairperson asked how sure the Department was that the unutilised funds would not be open for abuse.

Ms Menon said the Department was working on the assumption that the Members had the report of the Ministerial Review committee at the end of which were recommendations, most of which were interrelated. The Department would make available a slim-line report and the recommendations covered. She said that the blacklist practice has stopped completely since mid 2010. The Auditor-General report would be publicly made available and available to Members. The NSFAS had limited funds and for the moment the Department was extending to N1 and N2 who had previously been excluded, and should it obtain additional funds, N3 and N4 would be included. The problem of unspent funds decreased from R 49 million in 2008 to R500 000 in 2010 (slide 15). Funds were allocated to the accounts of student and not direct to students. Funds were returned in cases where students had applied and been allocated loans and then in mid year received bursaries from elsewhere. That loan would then be given to another student. The Department was processing the funds for medical students and there were additional funds made to pay 2010 fees

The Department reported that since the Accounting Officer and the CEO were not present, the EXCO was responsible for all matters relating to NSFAS and there were no danger of any documents being mislaid because there were measures put in place and the Department made sure that it was on the right course in terms of action plan following the Auditor-Generals’ report. The budget barely covered the public institutions and the Department did not have surplus funds available; those funds were allocated to public institutions and adding private institutions would have been a further deficit. There was a revision of the allocation formula and the issue was how the method would be changed in accordance with student needs. Some reasons for drop-outs were social issues which were beyond the control of the university and some students just disappeared. The Department said it would review the exclusion policies. For the residential fees, a means test had been used to estimate what a student would require; this did not cover the full cost but did in some measure quantified part of the cost. Regarding the NSFAS awareness, a communication strategy would be revised in the following quarter especially in the rural areas since some students did not even know when to apply for admission at universities and waited for the matric results. The Department had had to intervene on several occasions at universities and would have to develop systems and processes to deal with a difficult situation. The final year programme was in place and was a result of a Ministerial review where the Department for additional funds for NSFAS for first and second years. There had been changes in the policy regarding the repayment of the loan.

Mr Jody Cedras, Director: Special Projects, Department of Higher Education and Training, said that the legislation required that, in the absence of the CEO, the Chief Financial Officer (CFO) became the accounting authority and came in place to ensure the situation was dealt with. The NSFAS was not involved if the student was blacklisted in relation to store accounts, but it did look into the cases of students who had in the past been blacklisted because of NSFAS loans but who had been cleared. The means test process was unfolding. There were higher education institutions in Mpumalanga and North West, yet students went to other provinces. The Department had been able to address all the shortfalls. 

Ms Mncube asked how soon the process of turning loans to bursaries would be in place.

Ms Rantho asked if it was possible for more advocacies to be made to the NSFAS funds and asked for more information to be given to the rural areas.

Mr De Viliers asked if the Department should add the unutilised funds in 2008-2010 in order to get to the total amount

The Chairperson asked how the Department would ensure the ability of students to register.

Ms Menon said that in December the Department was looking at how the final year programme would roll out.  Also the system of loans being given as bursaries was already in place. The Department would contact the Chairperson from the NSFAS to ensure there would be booklets provided. The social work bursaries were not allocated by the Department but were provided by the Department of Social Development and NSFAS had no say in the list as those students were not NSFAS students.

Mr J Cedras said that the unutilised funds were year specific and were not an accumulative amount; the funds rolled over and became part of the following year's allocation.

The Chairperson asked to be updated on regular basis.

The meeting was adjourned.