National Student Financial Aid Scheme on the new student-centred model

NCOP Education and Technology, Sports, Arts and Culture

27 August 2014
Chairperson: Ms L Zwane (ANC, KwaZulu-Natal)
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Meeting Summary

The National Student Financial Aid Scheme (NSFAS) briefed the Committee on the new student-centred model of funding, as well as the readiness of the institutions towards a full rollover.

The shortcomings of the old institution-centred model were highlighted, such as difficulties in recovering loans due to the absence of a direct relationship between NSFAS and the students, susceptibility to fraud and corruption -- especially relating to the filing of fraudulent affidavits in order to get funding -- as well as inefficiencies that result in over, under and late claiming.

The new model addressed most of the shortcomings of the old model. It used an automated method of determining financial means, thereby addressing the problem of fraud and corruption, and had been found to be much more efficient, resulting in NSFAS having disbursed R1.2 billion to 65 550 students at 11 universities and colleges where the model was being implemented on a pilot basis.  The new model also enabled NSFAS to pick up on where students were not spending on the right things, and would help NSFAS to put in place measures to address this issue. In order for the new model to be rolled out to other institutions there was a need, among other things, to ensure full operational capacity within NSFAS and enhanced systems.

Members asked about the recovery of funds from students who dropped out of university or college, or who went for further studies overseas, and what the recovery rate was.  The recovery was stated to be R380 million per year against a possible recovery rate of up to R500 million per year.  Members also asked about the criteria employed in granting funding to students, and the perception that black students were favoured over equally poor white students in the grant of the funding.  NSFAS said the guiding principle in granting funding was financial means, irrespective of race.

Members asked how effective the apparent reliance on the South African Revenue Service (SARS) database was in determining financial means, as self-employed people might not be on that database.  What was being done about rural students who may not have internet connectivity, in the light of the new model? The response was that paper applications were still allowed and NSFAS was working with the Post Office to ensure it reached all corners of the country.


Meeting report

The Chairperson expressed disquiet over the late submission of the presentation by the National Student Financial Aid Scheme (NSFAS). The Members needed ample time to study the presentation in order to engage constructively with the presenters. The profuse apology from NSFAS was acknowledged.

Briefing by NSFAS

Mr Zamayedwa Sogayise, Chairperson of NSFAS, said that more than 1 million students had been funded by NSFAS since 1991. NSFAS had disbursed more than R41.5 billion to students in loans and bursaries since its inception. Funding to NSFAS had increased significantly over the years, but still fell short of meeting demand. NSFAS was undergoing transformation.

Mr Msulwa Daca, Chief Executive Officer of NSFAS, highlighted the shortcomings of the institution-centric funding system, which was based on the full cost of study and race to determine financial need.  This system had not proved to be ideal, in that NSFAS had never had a direct relationship with students until they had exited university or college, making it difficult to recover loans and replenish the pool of funds. The system was outdated and susceptible to fraud and corruption, such as the filing of fraudulent affidavits to support applications for funding. It was an inefficient system that had resulted in over-, under- and late claiming, among other challenges.

Mr Richard Mackinnon-Little, Technical Project Manager at NSFAS, explained the student-centred model of funding that was currently being piloted in 11 universities and colleges. The new model employed an automated method of determining financial means, and a grant of funding subsisted for the duration of the studies, as opposed to a year. Students were not required to apply for funding every year.

Mr Daca said the new model had distributed R1.2 billion in loans to 65 550 students at the 11 pilot universities and colleges this year, and had generally proved be efficient.  NSFAS was able to pick up on where students were not spending on the right items, and this would help NSFAS put in place appropriate measures to address these issues.  Students would only apply once for funding and the basis of continued funding was academic performance. The automated system also encouraged students to apply for funding before they got to the university or college and thereby avoid some inconveniences, like late registration, associated with applying late. The new model was also helping NSFAS to comply with the National Credit Act requirements from credit providers.  In order to roll out the new model, there was a need, among other things, to ensure full operational capacity within NSFAS and enhance systems.

Mr Sogayise assured the Committee that NSFAS knew where it was coming from and where it was going, highlighting the improvement in audit performance over the years and looking forward to a clean audit.


The Chairperson said she was happy with the transformation efforts of NSFAS and asked whether funds at universities were administered by NSFAS staff or the respective university staff.

Mr Sogayise answered that currently financial aid officers employed by the universities were responsible for administering the funds at the respective universities, but the transformation process proposed to have NSFAS staff in each university to administer the funds.

Ms P Mququ (ANC, Eastern Cape) spoke mostly in the vernacular, but seemed to be asking how NSFAS recovered loans to students who eventually drop out of university or college, and about the monitoring mechanism.

Mr D Stock (ANC, Northern Cape) asked how loan recoveries took place in respect of students who drop out of university but get employed, and whether the new model would detect situations where a student applying for NSFAS funding was already a beneficiary of another bursary.

Mr M Khawula (IFP, KwaZulu-Natal) asked what the loan recovery rate of NSFAS was, and the criteria used in determining the students who qualified for a loan and those who qualified for a bursary. How effective was the apparent reliance on the SARS database to determine financial means in the light of self-employed parents, who may be able to afford to pay university fees for their children but may not be on the SARS database?  What was the link, in terms of approvals, between NSFAS and the universities and colleges? If decisions to grant or not to grant funding were made at NSFAS level nationally, how were these decisions arrived at?

Ms T Mpambo-Sibhukwana (DA, Western Cape) said there had been some protests this year surrounding the issue of allowances for students, and some students had not received their book allowance as late as March, compromising the essential tools students needed for their studies. What had led to those protests? How did NSFAS recover loans to students who, on completion of their studies, go for further studies overseas? There was a perception that NSFAS funded more black students than equally poor white students. What was NSFAS doing to constitutionalise the financial means test and bring equality into effect? Did NSFAS funding cater for laptops for students?

Mr J Julius (DA, Gauteng) commended the NSFAS on its transformation efforts and asked if the financial means test was reviewed annually to check any changes in the financial status of students, and the impact of Funza Lushaka on NSFAS.

Ms L Dlamini (ANC, Mpumalanga) said the impact of the funding was more important than the number of students funded and asked if NSFAS was able to trace the beneficiaries of its funding to assess whether the funding was having the desired impact.  How did the bursary and loan schemes work in relation to the performance of students?  Did NFSAS fundraise?  What was the focus of the financial means test in light of the fact that sometimes students failed exams due to circumstances at home, and not because of a lack of seriousness?  What was the fate of whites who could not afford to pay university or college fees? How many colleges in Mpumalanga were funded?

Mr H Groenewald (DA, North West) said he was happy with the on-going transformation, but asked if this model was being implemented in all institutions and whether the pass rates of students would be made available at the end of each year under the new model.  It was important to link training to the job market so that once students had completed their studies they could be absorbed in the job market and not end up without jobs.  Are we in contact with the country’s economy as we train these students?  Is the corruption and fraud associated with the institution-centred model taking place at student or institutional level, and what measures are in place to reduce them?  Do the allowances paid to students cater for clothing for the poorest students, and how was NSFAS helping these students to get into the mainstream at university?

Ms L Mathys (EFF, Gauteng) said the transformation was a step in the right direction, but asked if NSFAS had statistics of the number of students who were eligible to enter tertiary institutions but were not funded, owing to various reasons such as unavailability of funds. How much did the IT model cost, was it outsourced and who was awarded the tender?  Rural students faced challenges regarding access to communication and found it difficult to apply for funding. What was being done to address these challenges? Did NSFAS provide the registration fees payable by students to institutions, to the students it funded?  When did repayment of a loan start, and were students or parents who failed to repay the loans blacklisted? There was a need to take into account the social conditions of NSFAS-funded beneficiaries when it came to repayment of the loans, to ease the burden on these people. Tertiary education should be free of charge within the confines of what was being discussed. Did NSFAS consider the fields of study applied for in determining whether to grant funding?

Mr Sogayise responded that the focus of NSFAS does allow funding of laptops for students. Its focus was on tuition, accommodation, transport, books, and food.  However, the Minister of Higher Education and Training had highlighted the issue that students needed to use laptops, and NSFAS was developing a strategy to look at whether the book allowance could be structured in a way that took the need for laptops into account.

The tender for the installation of the IT model at NSFAS had been advertised and had been awarded to Deloitte, at a cost of R98 million. These funds were not part of NSFAS’s allocation for loans and bursaries; the source of the funds was the Department of Education and Training.

It was not intended to paint a picture that all was well on the ground, as there were some problems regarding the administration of the scheme. NSFAS was thus looking to ensure value for money out of the scheme’s administration. NSFAS did fundraise, but the fundraising made up only a minimal share of the funding it received.  Most of the NSFAS funding came from government circles. The guiding principle of NSFAS was to fund the poorest of the poor, irrespective of race.

Mr Daca said that NSFAS received money from various funders who had their own rules regarding conditions attached to disbursement. The loan system was such that interest was not charged on the loans until one year elapsed after students completed their studies. Students who passed all their courses got 40% of the loan converted to a bursary. The repayment instalments depended on the salary earned by the beneficiary of the loan – the higher the salary, the higher the repayment instalment and the shorter the repayment period.

NSFAS did not facilitate the blacklisting of defaulting parents or students. There was no automatic exclusion as to who could apply for NSFAS funding, but the financial status of the applicants determined whether or not they should be granted the funding.  NSFSAS relied on the universities to provide information on students who dropped out. In addition the new model enabled NSFAS to identify students who had dropped out because of the direct interaction it had with the students.  

Universities had a bigger role to play in ensuring that students passed.  The role of NSFAS was to ensure that it met its obligations towards the students.   NSFAS was working with channels, such as the Post Office, to reach all corners of the country, but realised that some parts of the country were not connected and as such, the paper application option was still available.  There was a need to create linkages with the social security system to find ways of ensuring students who failed due to certain circumstances at home, could be assisted.   NSFAS recovered R380 million from former students per year against a possible recovery rate of up to R500 millio, and was working on modalities to increase the recovery rate.

Mr Mackinnon-Little said that the technology is housed at NSFAS’s offices, and was not rolled out to universities and colleges. Students could apply in any year of study.

The Chairperson noted that not all questions had been answered due to time constraints, and directed NSFAS to forward written responses to the questions that had not been answered to the Committee through the Committee Secretary.

The meeting was adjourned.

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