National Student Financial Aid Scheme Strategic and Annual Performance Plans 2013, with Deputy Minister of Higher Education in attendance

Meeting report

Appointment of Acting Chairperson
Mr Mzuyanda Dlanga, Committee Secretary, informed the Committee that the Chairperson, Ms M Makgate (ANC, North West) was absent and according to the Rules of the Parliament, an Acting Chairperson had to be nominated. Ms B Mncube (ANC, Gauteng) nominated Ms Z Rantho (ANC, Eastern Cape). The nomination was seconded by Ms M Boroto (ANC, Mpumalanga).
The Committee agreed that Ms Rantho should act as the Chairperson of the Committee.

Introduction by Acting Chairperson
The Acting Chairperson welcomed members and the delegation from the National Students Financial Aid Scheme (NSFAS). After a round of introduction, she said that she was happy that the Office of the Auditor General was present and said that the Committee would like frequent visits from the AG to the Committee.

Briefing by the NSFA)
The delegation from NSFAS was led by the Chairperson of the Board, Mr Zamayedwa Sogayise and the Chief Executive, Mr Msulwa Daca.

Mr Sogayise outlined the presentation which was going to comprise of a strategic plan and budget overview, the provision of details of Performance in 2012/13, overview of programmes, programme strategic objectives, performance indicators, targets and associated budget and a budget summary. The presentation also comprised of the NSFAS transformation programme.

Strategic Plan Overview
Mr Daca provided the Committee with an overview of the strategic plan of the organisation with an indication of the purpose and budget of each programme.

The two programmes included administration and student-centered financial aid with budgets of R 98.5 million and R 31.7 million respectively. The purpose of the administration programme was to conduct the over-all management of the entity and to provide efficient and effective support services to internal departments. The purpose of the Student-Centered Financial Aid programmes was to achieve the vision and mission of NSFAS by creating a centralised student financial aid system and to provide funding to eligible students while maximising recoveries and striving to increase the pool of funds.

Mr Daca told the Committee that 2012, a total 383 114 students were assisted with a total amount of R7.7 billion disbursed. The students assisted and the money disbursed was spread across the universities and FET colleges in the country.

Mr Daca went ahead to present the Committee with the 2013/14 strategic plan targets which were tabulated to show the strategic objective, performance indicator, strategic plan target, the budget and the 2013/14 Medium Term Expenditure Framework (MTEF target). On the loans and bursaries budget, he said that the total amount received from the Department of Higher Education and Training and the Department of Basic Education stood at R6.9 billion during the 2012/13 financial year and R7.3 billion during the 2013/14 financial year. Other funding sources had provided R7.4 billion in 2012/13 and R7.6 billion in 2013/14.

NSFAS Transformation Programme
On NSFAS transformation programme, Mr Daca said that NSFAS funding had increased significantly since the NSFAS Act in 1999 growing from R441 million in 1999 to R8.2 billion in 2013. Financial aid to university and FET college students had increased substantially in the past 5 years. However, the NSFAS structures, policies and systems had not kept pace with the increased growth in funds. The loan management system developed for the TEFSA was out dated and inadequate. This led to an Auditor-General disclaimer of opinion in 2010. He said that annual applications through financial aid offices were not controlled by NSFAS and the process was deeply flawed. NSFAS had no direct relationship with students until they had exited the learning institutions. This old system did not manage information or facilitate reporting. The Committee was told that despite the growth in funds, supply still fell short of demand as there was a shortage of about R3 billion to cover the students who were registered but did not have funding.

Mr Daca said that in response to the challenges, NSFAS had adopted a new student-centered model and had improved its information technology (IT) systems. There was now a centralised and standardised process which aligned admissions and registration procedures. The centralised allowances distribution was going to help detect and prevent fraud and improve governance. The Student-centered model ensured that the funds reached the intended beneficiaries.

Discussion
The Acting Chairperson acknowledged the presence of the Deputy Minister of Higher Educati0on, Mr Mduduzi Manana and said that it was important for the Committee to have a word from the Deputy Minister.

Deputy Minister Manana apologised for coming late as he had to attend to some other business in Parliament. He said that the Annual Performance Plan and the budget was evidence of the work which NSFAS was doing. The demand on the organisation was increasing and he was happy that they were handling the various issues well although it was a very challenging task to match the demand for student funding. The Ministry was happy with the NSFAS programmes as the programmes represented a plan which showed that the money spent was going to reach the intended beneficiaries. In the past, the reputation of the organization had been at stake but the new strides and transformation programmes were going to remedy the situation. He said that he was well pleased with the NSFAS board. 
Deputy Minister Manana said that if there were any issues or concerns discovered by the Department in relation to NSFAS and its programmes, the Committee was going to be informed on both the challenge and the steps taken to address them. He said that the Department and NSFAS were willing to take the comments, questions and suggestions from the Committee.

Questions
Ms M Boroto (ANC, Mpumalanga) commended NSFAS for the registered improvement in its services. There was good news going around about NSFAS and the public opinion about the organisation was improving. The Committee wanted NSFAS to increase their outreach so that learners all around the country could know how to access the services offered by the organisation. She asked what NSFAS was doing with the rollovers? She said that the AG had raised issues of compliance with Supply Chain Management requirements. What had been done to address this situation? On the use of vouchers by students and beneficiaries, were there appropriate mechanisms in place to ensure the right and correct usage of the vouchers? Did the universities and FET colleges assist in establishing whether the beneficiaries really deserved the support?
On recoveries, how did NSFAS confirm that the beneficiaries were actually employed before they set out to recover the loans? Was NSFAS assisting graduates to get jobs so that they could repay their loans?

Ms Mncube asked what systems were being used to recover the outstanding loans.
On capacity, the Committee noted that there were the vacancies of the CEO and CFO. If there was a turnaround strategy, how could these very vital posts be vacant?
She said that some of the disbursing agencies used different criteria. What was being done to ensure uniformity and standards in disbursement?
In the 2012 State of the Nation Address, the President announced that NSFAS would be converting the loan into a bursary for final year students. What was being done to implement this Presidential instruction?

Ms R Rasmeni (ANC, North West) said that there was a visible improvement in the performance of NSFAS. She asked if the Board could explain how the central application programme was unfolding. She asked what other funding sources were being considered by NSFAS? She said that there were gaps in admission and application policies which allowed for abuse of the system. What was being done to close these gaps? Why was NSFAS using non-governmental organisations (NGOs) to fund education in public institutions?

Mr M De Villiers (DA, Western Cape) asked why there were differences in the structure of bursaries from NSFAS and from the institutions. On the delivery of loans and bursaries to the institutions, why were there delays in the disbursement of money. He said that he had been informed of many cases where students had to wait for very long periods before getting the funds.

Mr S Plaatjie (COPE, North West) congratulated NSFAS for the sterling work being done. He said that there was a case with FETs in the North West where students received money but there was gross misconduct in the way the bursaries were spent and the way the disbursing agencies treated the students. The distributing agencies used guesthouses owned by friends to offer accommodation to students. The guesthouses were not well managed and the services provided were very poor. The students were suffering and the situation had to be looked into.
In relation to the vouchers, students complained that they were not getting the vouchers and because of this, they could not go to school. What was the plan put in place to ensure that the misuse of the system was stopped and that the vouchers were efficiently distributed? He said that the interchanging use of the words “eligible” and “deserving” students was creating confusion. Could the committee be clarified on the use of the words?  

The Acting Chairperson asked if there was consideration and provision for middle class income families. She said that the focus was always on the very poor yet there were families that struggled very much although they had some amount of income. What was being done to accommodate this class of households? 
On the use of vouchers, she asked if there was a system to track the use of these vouchers. Was there any plan to make the funds in the vouchers transferable from one academic year to another?
With regards to the interaction channels of NSFAS, she said that she was concerned about the placing of NSFAS forms in post offices and NSFAS regional offices. She asked if schools were not the more appropriate places to keep the NSFAS forms instead of post offices or regional offices.

Responses
The Deputy Minister said that there were many concerns about the use of NSFAS funds by FET Colleges and universities. He said that he was aware of one FET College where about R60 million was allocated but only 1 million was used for students and the rest was used for salaries. He said that the Department was working hard to mitigate these challenges. Qualified chattered accountants had been brought in to manage the financial situations in FET colleges and this was intended to rectify the anomalies. The interventions by the Department were going to be of help and the work was progressing positively. He said that it was a very wrong thing for the money to be diverted and an investigation had been opened and the perpetrators of these injustices were going to be brought to book.

Mr Sogayise thanked the committee for the words of congratulations and he said that he was happy that the work done by NSFAS was noticed by the Committee.
On the issue of capacity and the appointment of a CEO, he said that Mr Msulwa Daca was the CEO and the Chief Executive and had been appointed in February 2013. There was also a Chief Information Officer who was heading the technological operations. The post of Chief Financial officer had been advertised and there was a massive recruitment process underway.

On the central application process, new technology had been acquired and was currently being used. This was the result of a huge tender process and the organisation was engaging with all the stakeholders with the intention of improving the application process. The new model was a pilot which was being run at the University of the Western Cape before it could be rolled out nationally. NSFAS was working on tight dates to ensure the effectiveness of the roll out of the programme.

Mr Daca said that with regards to the issue of late disbursement of funds to the various institutions, the focus of NSFAS was now on the students. A system had been derived to pay advance sums of money to institutions. This was called up front payment. The intention was to make funds available to the various institutions so that when it was time for students to be paid, the internal processes of NSFAS were not going to be an issue. It was however sad that some of these institutions used the money for other things.

On payment of shortfalls, the recovery of outstanding loans was important as the money was going to be used to cover in the gaps.

On Supply Chain Management compliance, there was significant improvement on internal processes and this was reflected in the Auditor General’s 2013 report with the new policy of zero tolerance taking a central place in the organisations governance and administration.  

In terms of recovery of loans, NSFAS made sure that it informed the public on its processes. It was important to note that NSFAS did not blacklist any of the graduates who had outstanding loans to pay. The system did not go after anyone who was not employed. It went only after graduates who earned more than R30 000 per annum. In this regard, NSFAS was working with SARS and other government departments to establish whether graduates who owed money to the organisation were employed or not. A full time office had been set up which was charged with debt collection. It was working with the SETAs to find new ways to enhance the employment of graduates.

On use of NGOs, NSFAS had agreements with NGOs for the disbarment of funds and it was important to note that some of these NGOs had been very helpful. The NGOs assisted and did follow up with the students during and after their studies. Part of the problem was a system problem and that was why there was now a central rule and the funding of students was now to be centralised. Only an amount of R10 million was allocated to be disbursed by NGOs. There was the need for a uniform rule around the whole country which governed the disbursement of funds to students either by NGO’s or the academic institutions themselves.

On other sources of funding, the SETAs were coming on board to assist with student funding and this was to be confirmed in the near future. There were hopes that the partnership with SETAs was going to cover a large portion of the shortfall.

On the interchanging use of the terms deserving and eligible, the key criteria used by NSFAS were financial situation and academic performance. It was a policy issue which had to take many factors into consideration. The intention was to not only assist the poor but to fund potentially successful students who were progressing and could eventually give back to their families and communities in return.

Mr Daca said that the 60/40 rule applied and this was a rule which held that if a student passed all their courses, 60% of the loan was converted into a bursary. The instructions from the 2012 SONA had been implemented since 2011 and about 29000 students had benefitted from this programme. The programme had been rolled out and was working very well.

Mr Sogayise said that the questions on the vouchers were going to be answered by the Technical Project Manager of NSFAS, Mr Richard MacKinnon-Little.

Mr MacKinnon-Little said that with regards to the use of vouchers, in most cases students were actually receiving the money but spent it inappropriately. He said that NSFAS had picked up situations where students actually used the vouchers to pay for accommodation but went ahead to sub-let these rooms out to other students. Situations we also identified where students bought goods such as sugar in bulk and sold it to shops at lower rates so as to get cash out of the system. After they spent this money poorly, the students complain about the lack of funds when it is actually a result of their mismanagement. He said that NSFAS was however considering several options to address the mismanagement of these funds by students. NSFAS was considering the disbursing of the money on a monthly basis so that the students could not spend it upfront. The big challenge was with providing transport since this was an on-going and complex area.
He said that it was also difficult to establish if a student had dropped out. NSFAS relied on the universities and colleges to notify NSFAS when students dropped out.

The Representative of the Department of Higher Education on the NSFAS Board, Mr Shai Makgoba said that on the issue of governance, NSFAS had a relatively new board and the Minister was the executive authority. The Department wanted a system that was responsible in terms of student financial aid. That was the rationale behind the appointment of a new board. That was also why all the NSFAS board members were beneficiaries of the scheme.
Mr Makgoba said that on the issue of accommodation, the Department had told the Committee that a policy had to be gazetted to regulate student accommodation. The policy had been extensively circulated. This was mostly for universities but was going to be standardised to include FET colleges at a later stage.
He said that in terms of the eligibility of students, NSFAS was making sure that it did not fund students who were not performing well. If NSFAS was funding failing students the entire programme was going to be a failure. The Department was in support of the transformation process at NSFAS.
Mr Makgoba said that the specific situation of misappropriation of the NSFAS fund mentioned by the Deputy Minister was the Northlink College. 

Ms Boroto said that the people who were found guilty of mismanaging the NSFAS funds as indicated by the Deputy Minister had to be arrested and jailed.

Mr Sogayise said that it was important for the Committee to note that the new transformation model of the organisation was to target students from Grade 9. The objective was to make students aware of NSFAS even before they matriculated.

The Acting Chairperson said that there were members who had other commitments so follow up questions could be written and given to NSFAS for responses at a later stage.

The meeting was adjourned.