National Student Financial Aid Scheme and Deputy Minister on NSFAS 2013/14 Annual Report

NCOP Education, Sciences and Creative Industries

25 February 2015
Chairperson: Ms L Zwane (ANC, KwaZulu-Natal)
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Meeting Summary

The National Students Financial Aid Scheme (NSFAS), in the presence of and with input from the Deputy Minister of Higher Education and Training, presented its Annual Report for the financial year 2013/2014 to the Committee. It reported that it had, for the third consecutive year, received an unqualified audit opinion. Since inception, the NSFAS had assisted 2 million students with awards of R41.5 billion, and its budget had increased dramatically, being at R9 billion in 2014. It had doubled its staff to cope with the new demands, but overall demand still outstripped supply and NSFAS would never be able to fund all those requesting assistance. It was implementing some of the recommendations from the inter-ministerial committee. The shift from the old university-based model to a new student-centric model had come with some challenges, but these were still being addressed. Overall, NSFAS was on a sound footing, with a fully functioning and stable board that was complying with the legislation. For the third consecutive year, it had achieved an unqualified audit report although the Auditor-General had expressed some findings around planning and quality, which the Board would be addressing, and on which Members later expressed their concern. NSFAS was funding university student in seven provinces and students from Technical and Vocational Training colleges in nine provinces, had funded more than 400 000 students and disbursed R8.7 billion. Since inception, it had granted R41.5 billion to 2 million students. The offerings were described and it was later also expanded how they were paid. If students passed all courses in the final year the loans were converted to bursaries. NSFAS funding was supplemented by other funding also. There had been 62.5% and  57% of achievement against targets in the two programmes. The main challenges facing NSFAS included the students with historic debt, whom it could not help, the need to recover funding, the fact that some programmes such as the BTech remained unfunded, and process challenges on the new system. Some departments provided information readily, others did not, and this affected the payment cycle. This year, NSFAS had managed to institute payment in the first few months of the year, to avoid clashes between academic and financial years. NSFAS often found itself the scapegoat for issues it could not control, such as student housing concerns. It needed to improve its reporting systems to attract back some funders who had been dissatisfied with the previous system.

Members expressed their appreciation of the way that NSFAS was working and the improvements it showed, but were not entirely happy with the format of the presentation, commenting that it lacked detail, did not give specifics of amounts paid, and, most importantly, did not have a provincial focus to enable Members to report back to their legislatures and constituencies. They asked if NSFAS was seeking international funding, how it paid the students, whether any financial management guidance was given, and how it tried to both deal with and avoid corruption. Members said that it needed to be made clear to students that if they caused damage to property during riots, they were essentially harming themselves and future generations if money needed to be diverted away from loans to fix damage. One Member raised the question of campuses in Mthatha and other Eastern Cape areas that were either unfinished or were being used as the personal fiefdom of a political figure and wondered if the DHET could intervene or NSFAS make money available to fix the problems. They raised specific questions on student numbers, travelling costs, which seemed high, attendance of board meetings, and what the transformation programme entailed. They asked about collaboration with other departments to check information received to support the means test, and whether and how NSFAS would follow up each year to determine whether students' circumstances had changed, and when it demanded repayment of loans, as also whether the position was eased for the disabled students. Members asked that questions not answered in this meeting should be addressed in writing or at a later meeting. The Deputy Minister took the point about the need for provincial breakdowns and confirmed that the Department shared the Committee's concerns on how to allocate funding and was looking into better recoveries. He also noted that the NSFAS and Department were working on attracting more funding internationally and from the private sector and were still looking into the position of those who did not satisfy the strict means test yet had insufficient disposable income to send their children to university. The NSFAS would continue to report back regularly.

Meeting report

Chairperson's opening remarks
The Chairperson noted that the presentation on the Annual Report (AR) should have taken place last year, but would be heard today.

National Student Financial Aid Scheme (NSFAS) briefing
Mr Mduduzi Manana, Deputy Minister of Higher Education, appreciated the invitation for the National Student Financial Aid Scheme (NSFAS) to address the Committee. NSFAS would present some of the challenges that were faced by the the Ministry and Department and government at large. NSFAS was an important pillar of the higher education system. Student funding was a major task of the Department and if this failed, the whole system would collapse. He mentioned that this year South Africa would celebrate 60 years of the Freedom Charter, which stated that doors of learning shall be open for everyone.  Over the last five years student funding had increased, from about R2.5 billion to R9 billion in 2014, but he noted that as government increased the allocation also the demand increased for NSFAS support. DHET was doing whatever possible to accommodate all the young people who wanted to pursue and further their education.  He highlighted that it was a difficult period, as during interaction with the communities, complaints were voiced about NSFAS. He hoped that there would be fruitful discussion and robust engagement with the Committee, so that this would assist the DHET and NSFAS in their task.


The Chairperson thanked the Deputy Minister and said that the Committee was aware that during the previous term the Department commissioned a Review to study operations of NSFAS and analyse limitations of funding and recommendations. She asked that the NSFAS delegation also touch on that, recalling that there were around ten recommendations.

Mr Zozo Siyengo, Acting-Chairperson, NSFAS, apologised for the absence of the Chairperson, who was not well and who had apologised. He assured the Committee that the NSFAS board was stable, and functioning. The challenges around the move to a student central funding model, changing from the previous regime, were still of concern but were being addressed. 

Mr Msulwa Daca, Chief Executive Officer, NSFAS, noted that one of the most critical points for NSFAS was allocation of funds and recovery of loans and advising the Minister on matters relating to financial aid. He too confirmed that the NSFAS Board was fully functional, and it operated in terms of the NSFAS Act. NSFAS was in the process of moving out the old system, of universities administering the financial aid, as the view was that NSFAS should communicate with students, directly without a middle man. He reminded the Committee that a few years back NSFAS was operating under a turnaround strategy. He further outlined responsibilities delegated to Committees of the Board and the attendance of board members (see attached presentation for full details). He also mentioned that NSFAS was in the process of hiring new staff as it was understaffed and more were required to implement the new model. In the year under review, staff numbers had almost doubled.

Mr Lerato Nage, Chief Financial Officer, NSFAS, addressed the Committee on the financial performance of NSFAS. He reiterated that for the third consecutive year, NSFAS had achieved an unqualified audit opinion from the Auditor-General (AG).  In 2013 it distributed financial aid of R8.7 billion, which represented a 8.6% increase from the previous financial year, and was slightly higher than CPI inflation of 6%. NSFAS had funded students at 23 public universities in seven provinces and 50 Technical and Vocational Education institutions (TVETs) in nine provinces. NSFAS funded, overall,  194 923 students at universities and 220 978 at TVETs.  Of the R8.7 billion made available, R4.5 billion was converted to bursaries at TVETs and universities, whilst R4.2 billion was in convertible loans to university students. 

Since inception NSFAS had disbursed R41.5 billion to 2 million students in South Africa.  NSFAS contributed to free education for those for poor working class families by providing food and bursaries and converting 40% of loans to bursaries based on student performances. In the final year programmes, NSFAS distributed R1.1 billion to TVETs, which were full bursaries. He also noted that there were other external bursaries, such as Funza Lushaka, National Skills Fund, and Sector Education and Training Authority (SETA) funding. 

Presenting the balance sheet, he noted that cash left by the end of the financial year was R1.8 billion, made up of R255 million of recoveries. He referred Members, for details, to note 36 on page 94 of the Annual Report, which also set out the utilisation of investments and cash and cash equivalents and the pre-payments of R649 million that were made during the financial year. He noted that the fixed asset figure of R62.1 million related, for the most part, to the new student-centred model that was introduced, and the details could be found on the statement of cash flows. The statement of financial performance basically outlined how the operations had performed during the period in question. The operational expenditure was R51.8 million, salaries paid to staff were R65.8 million, transformation programme was R5.9 million, and audit fees paid to AG were R9.9 million. Computers were at R5.8 million, consulting fees R5.8 million and travelling was R4.9 million, which included board members' travelling arrangements and NSFAS visiting all institutions across the country. Storage and scanning accounted for R1.4 million.

Mr Daca spoke to the Annual Performance Report (p15-22) repeating that NSFAS received an unqualified audit report. The AG raised some issues in terms of the quality of  planning and reporting and the Board had plans to improve for subsequent year. In terms of achievement for planned targets; he said that under Programme 1, 62.5% of targets were achieved and in Programme 2 57% was achieved. This was an area of focus for the Board and the Department. NSFAS had distributed all available funds to students. There were some targets that were not met, which included governance processes for that year and the Board had flagged and noted this issue to ensure that it was addressed. 

The main challenges in 2014 were outlined. Students with historic debt were those who still owed from previous years, and could not register because they had outstanding fees. Students who owed debt could not be assisted, and he pointed out that it was obviously impossible for NSFAS to assist everyone, simply because of supply and demand. NSFAS was now in a process of recovering funds from previous beneficiaries. There were still unfunded programmes, including the B.Tech, offered by various institutions. NSFAS funded first degrees, and was not permitted to fund second degrees.

The implementation of the new model still had challenges and problems with systems, people related issues and thorough processes. Students protests in 2014 was much bigger than in 2015. Sometimes NSFAS was used as a scapegoat for other related but not responsible issues, such as accommodation - a Departmental responsibility, not one attaching to NSFAS, although NSFAS was asked to assist by, for instance, releasing funds for leasing of private accommodation.

In relation to 2015 preparations he noted that NSFAS had made upfront payments to enable registration of students from poor families at TVETs and universities. The TVET would get 10% and universities would get 30%, on request.  Some funders were not happy with the way NSFAS reported to them and they had pulled out, but NSFAS was working to improve its systems. .There was a challenge with Funza Lushaka form DBE, which had formerly only confirmed in April in line with its financial year but this year, for the first time, it had indicated approvals in January, which worked and went far to address the challenge of delayed payments.

The Chairperson thanked the NSFAS officers for the presentation. She highlighted that it was short and straight to the point, and highlighted critical issues.

Mr H Groenewald, (DA, North West), thanked the NSFAS team for the presentation and said he had a positive impression and was pleased with the progress in this Committee and NSFAS, and improvements in NSFAS over time. His biggest worry however was the statement that R50 billion was needed, to add into the system, and he wondered if NSFAS was looking internationally for funding. The control of money was a potential problem in NSFAS, and he asked how NSFAS would manage the process, whether the money was handed to students directly, or the fees paid to the universities and then the remainder allocated to students. He noted that many students were rural areas and possibly did not have experience of handling a lot of money. That led to his next question, of whether NSFAS would teach students how to handle personal budgeting.

He pointed out that there was a lot of fraud on the part of the Higher Education (HE) institutions, from NSFAS, and even when students did not arrive to take up their places, the money would disappear and never be repaid to NSFAS. He asked what measures there were to combat this. He also wanted to know what policies were in place to guide functions and operations of NSFAS.

He was worried about violence and protest, and in particular damage caused to institutions, and he strongly suggested that the students must have it firmly pointed out to them that any breakages and damage were causing loss to themselves. He commented that it had been interesting for the Committee to visit Mthatha campus, which was now in very good condition, compared to a few years ago, when there was much violence. That was a good track and positive for SA and NSFAS. One of the five satellite campus in Eastern Cape was used by a political party for its purposes and for private use, and intervention was needed there.

Ms L Dlamini (ANC, Mpumalanga) welcomed the report and the presentation. She stressed that Members here were representing provinces, so information that related to provinces was very important, and she expressed dissatisfaction that the current presentation had not focused on those issues, particularly that there was no mention of her own province of Mpumalanga, which meant that she would not be able to convey much to her legislature from this meeting. The manner in which NSFAS was presenting the Annual Report was worrisome and vague. The PowerPoint presentation on the Annual Performance report did not say much, did not detail the targets on programmes 1 and 2, and did not indicate how much was spent, nor to what extent the provincial targets were reached. A good report must have key points, not a lot of details.

Ms Dlamini said that the Committee needed to know how many students needed support from NSFAS, and how many were currently supported. She indicated that there was an indication of travelling costs, but not detail of where the travelling was to and from, nor how many trips, and she was particularly worried at the high figure. Again, it was difficult to engage with the report.

Ms Dlamini said that she needed to know what the transformation programme was,  as slide number 9 said nothing much. Some problems ran over years. She wondered how NSFAS dealt with historic debt and how students could be funded in one year and run up historic debt for the next. Some students in Mpumalanga had been forced to drop out because of inconsistent funding.

Mr M Khawula (IFP, KwaZulu-Natal) shared many of Ms Dlamini's concerns. He too was concerned about recoveries, pointing out that the budget of NSFAS was increasing every year, but the recovery was not. Further details were needed. From what was stated, it seemed like there was a low recovery. He also thought the audit fee of R9.9 million was very high and the AG was charging a lot compared to private companies. He noted that only achieving 62.5% and 57% of targets was very low, and not in line with the money provided. He wondered what improvements had been made to the means test, to minimise corruption. He asked if there was collaboration with the Departments of Home Affairs and Social Development to compare information and strengthen the possibility of detecting corruption.  Lastly he was concerned about the number of meetings attended by Mr Spencer Janari and Ms Pearl Whittle, and asked if they were still part of the Board.

Ms T Mpambo-Sibhukwana (DA, Western Cape) wanted to compliment Mr Manana for his forthright and truthful setting out of challenges faced by both the Department and NSFAS. She wanted more information on the means test and recovery of loans. Some NSFAS students failed and dropped out, In honesty, the means test was there to advantage those previously disadvantaged, but it also disadvantaged many eligible learners. The socio economic status of students changed from year to year, and she wondered how NSFAS would track improvements to the financial position. She asked if debt was written off for those benefited before 1998. She commented that students were misusing vouchers, taking advantage, and wondered how NSFAS was controlling this and monitoring use.

She commented that when the Committee visited Mthatha, the King Sabata Dalintyebo Campus still had an incomplete building and sought intervention on that.

The Chairperson asked if the issue of delayed payments at the beginning of the academic year was  resolved, asked what the allocation formulae were and the threshold for determining needy students. She asked what would happen if universities charged more than what NSFAS gave and what would happen to the remaining fees, and whether universities had to chip in. She wondered what NSFAS was specifically seeking when administering the means test, and whether it looked at matters such as schools attended, locations, family background, or income. She asked what the maximum time was to conclude loans, and particularly whether this differed for disabled students.

The Chairperson was dismayed that although so much was invested in students, the dropout rate was high. In the case of struggling students she asked if NSFAS had a "flagging system" and "early warning" system. She also commented that the presentation did not have enough provincial details, which were particularly important for the Select Committee. She noted that the Office of the Premier in KwaZulu Natal (KZN) gave funding and enquired about other provinces. She asked how NSFAS would control "double dipping" by students claiming from different institutions. She asked that NSFAS now answer the questions, with those that it could not answer now being referred for answers at a later meeting.

Mr Siyengo answered questions about the board, saying that the Board members cited as having attended few meetings had only been appointed in November 2014. He acknowledged the shortcomings of this presentation in relation to provincial information. He commented that some of the questions raised, in relation to buildings and property management, were not in the remit of NSFAS, but the DHET. The Board had listened to all questions and would discuss them at future meetings. There were management issues that came out, in relation to how it managed funding, recovery and communication strategies, and all would be noted and discussed by the Board.

Mr Daca confirmed that he too had noted the comments about the need to have a provincial focus. IN relation to fundraising he said that NSFAS was looking for funding from everyone who was willing, and was branching out of the public domain to also seek funding from the private sector and international donor agencies, and would rekindle relationships with those who had previously funded. On fraud, he confirmed that the DHET was leading full and thorough investigations. On the new model, he emphasised that this actually gave NSFAS control of the information, as compared to the old system which was HE institutions based, not linked and not coordinated. The Department of Home Affairs and South African Revenue Services were working with NSFAS, on what they could provide, with more automation, within the boundaries of the SARS Act. NSFAS was in the meantime putting in place interim measures such as sampling and cross checking against the databases. In the old system money was paid to universities, but now under the new system, the fee was paid directly to universities, students would receive a book allowance paid in book shop vouchers, and food vouchers to control funding being used for other purposes.

He confirmed that NSFAS was not happy with the recoveries. However, students were permitted to start repaying when they started working and earning above R30 000. The money paid for TVET and FET Colleges was by way of a 100% bursary. If students passed  all courses of the final year the loans were converted to a bursary, and this affected the recovery. There were few loans and more bursaries.

Mr Daca said that in relation to delayed payment to students, NSFAS had formerly, between January and March, processed lists from other funding partners, which had delayed the making of payments, as most related to the start of the financial year in April. This, however, clashed with the academic calendar.  NSFAS was now giving money to universities early, to register students through the upfront payments. Its work was paper based and it was working on shortening the turnaround time. it had  had to wait for universities to deliver to capture and process payments and this depended how far and fast the universities played their part. NSFAS was working on turning around this process. Students who were not performing would not get funding the following year. NSFAS had a threshold and a timeline of when they must finish their qualifications, and there was a generous period of two years to finish with NSFAS funding. All students could apply, as new entrants. The new model was not without its challenges but it was promising good and positive results.

Mr Nage said that, in relation to policies, there were fraud and risk management policies in place. When NSFAS transformed the policies similarly were updated and some remained still to be approved by the Board. The R4.9 million included deploying staff in institutions, travelling to student leadership meetings, and board members' travelling costs, as well as attending meetings with funders and signing MOUs either at their or NSFAS offices.

Mr Lerato Rubushe, Chief Operations Officer, NSFAS, said that delays from funders sometimes delayed NSFAS' payment processes. For instance, provinces were supposed to collate lists of students, forward them to national departments, then to NSFAS. There were bottlenecks in the process, and NSFAS was trying to address this as early as possible. Social Workers were in a limbo phase but NSFAS was trying to address that. DHET funding was processed early, for which NSFAS was grateful. Provinces were supposed to collate lists of students and forward to National Departments then to NSFAS. Bottle necks delayed this process and NSFAS was now pushing to address this issue as early as possible.

Ms Dlamini suggested that NSFAS should check all other provinces and municipalities who gave out students funding, because this presentation was under-reporting government efforts. She repeated that the facilities at Mthatha remained a challenge and one politicians was threatening people and leasing out facilities privately. She also wanted the ten recommendations question answered.

Mr Groenewald made the point that if all policies were in place, he did not understand why there were challenges. Smaller policies, however, were also important. He asked that the AG's observations must be addressed as they were worrisome.

Mr Siyengo said the transformation project fell under the ten recommendations from the Review Committee, and seeking funders and communications was part of those recommendations. NSFAS would submit a comprehensive report on this issue. It was separating out the recommendations to be dealt with by various board committees.

Mr Manana assured Members he would follow up on the campus issues raised and would reply in writing as to how the Department could intervene. He appealed to NSFAS to ensure that full answers were compiled as soon as possible. The Department sought guidance and input from this Committee. The DHET was, daily, recording progress and good stories. A forensic investigation had been launched to determine the level of corruption and fraud that were related to funding, and a tender had been advertised. As in any good and corrupt system, there were still people who wanted to benefit wrongly, but the Department would continue to report.

The Deputy Minister conceded that Ms Dlamini had a good point and it was necessary to give the Committee reports on each province, so that he accepted that the reporting format should be different.
He also agreed that NSFAS needed to do more on recoveries, although he pointed out that in the last year NSFAS had achieved quite well in this area. He agreed that it was important to recover to feed back into the system and said that NSFAS and the Department must launch a "pay back the money" call of their own, calling former beneficiaries to repay. In relation to fundraising, NSFAS had begun to approach the private sector to come on board, did believe they could make a significant contribution and hoped to get positive responses. It was good that many companies offered bursaries already but the DHET wanted them to contribute to education in general terms, and appealed also to the Committee for assistance. The Deputy Minister said that he and others had sleepless nights after rejecting students because NSFAS could not help everyone, and he mentioned parents of students who did not qualify on the criteria but nonetheless could not afford to send their children to university, who were caught both ways, cutting out children of many civil servants such as nurses, teachers and junior officials. However, NSFAS refused to become despondent, was working on all the issues and would improve its reporting, and he appealed to the Committee to walk with the NSFAS down the long road.

The Chairperson expressed appreciation for the work being done by both NSFAS and DHET, and promised the Committee’s support. Of particular concern were the costs of private accommodation, which were exorbitant. She commented that decreasing corruption would encourage the private sector to come on board. She assured the NSFAS that the comments were aimed at constructive engagement so that the Committee and NSFAS could work better together.

The meeting was adjourned.

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