National Student Financial Aid Scheme (NSFAS) & DHET status report, with Deputy Minister

Higher Education, Science and Innovation

28 February 2018
Chairperson: Ms C September (ANC)
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Meeting Summary

The Portfolio Committee on Higher Education and Training received a briefing from the Department of Higher Education and Training (DHET) outlining how it will utilise the increased budget provisions received by the sector. 

Adding to the R10bn the Department received in October, National Treasury provided an additional R57 billion to the baseline for higher education over the next three years. This funding will in turn be utilised to fund a new bursary scheme designed to provide no cost education for poor and working class students while also alleviating the debt current students have incurred and now owe their universities. This debt was accumulated by students eligible to receive funding from the National Student Financial Aid Scheme (NSFAS) whose expected family contribution was not met or whose costs exceeded the scheme cap of R67,000. Future students will now be covered by the new bursary scheme and will receive their funding once they sign a form agreeing to the conditions of society contributions.

NSFAS presented an update of its undertakings in light of the challenges that had been faced in the past. NSFAS received a sizeable increase (51.3%), which will provide the funding for university bursaries, allocations for unfunded, continuing and new students, and free higher education and training for poor and working class students.

Members responded with anger about NSFAS presentation, stating their lack of faith in an institution that presents itself so poorly to Parliament. The NSFAS presentation was completed just hours before the start of the meeting and Members were not provided copies until the start of the presentation. With facts being jumbled around, Members feared that NSFAS was not being upfront with the Committee or transparent enough for the public.

In addition, Members asked about the: average number of first year students expected to be funded in the future, length of student funding, capacity challenges in the Department and TVET branch specifically and conditions students must accept to receive their bursary.

Meeting report

Briefing by the Department of Higher Education and Training (DHET)
Dr Diane Parker, Deputy Director-General: University Education, DHET, began the presentation by providing the Committee with an overview of the Department’s budget provisions before looking at the provisions allocated specifically for university and Technical Vocational Education and Training  (TVET) sectors.

National Treasury submitted the revised Medium Term Expenditure Framework (MTEF) allocation letter which provided an additional R57 billion to the Department for subsidy funding for universities and TVET colleges as well as funding for bursaries distributed through NSFAS to students at these institutions.

The additional funding allocated to universities accounts for the increase in subsidy funding and covers the 8% increase for students in the system. The total amounts to R11.3 billion over the MTEF, working towards taking university subsidies up to 1% of GDP over a five year period.

An extra allocation has been granted for universities to support first year entrants into the system at the full cost of study. This is the new bursary scheme designed for poor and working class students. This new bursary scheme will have conditions attached that will be implemented beginning this year. In five years, all students will be covered by the new bursary scheme. The increase is substantial each year as a new group of first year entries is added into the system.

The additional allocation for earmarked grants are mainly for operational costs for the 3 new developing universities, University of Mpumalanga, Sol Plaatje University and Sefako Makgatho Univeristy, and the Clinical Training Grant to support the growth in clinical training for health professionals, especially for doctors and nurses.

Additional funding was allocated for increasing bursaries for new FTENs into undergraduate studies at public higher education institutions over the MTEF period, R4 581 billion in 2018/19, R13 124 billion in 2019/20 and R15 315 billion in 2020/21, giving a additional total of R33 billion over the MTEF period. The allocations through NSFAS have increased from R9 849 billion in 2017/18 to R35 321 billion in 2020/21. In the Budget Review documents, the allocation reflects R67 billion because there was already a provisional R10 billion allocation to Department in the 2017 (R5 billion was provisionally allocated for 2019/20 and R5 billion for 2020/21 to NSFAS). When the IMC approved the R57 billion announced, it excluded this amount as it was already allocated in the 2017 MTEF.

Dr Parker acknowledged that this calculation was reached on some assumptions, the key assumption being that it could take students falling in the R350 000 threshold and cover 40% of their university first time entrance. This scheme will cover the actual cost of studying and provide an allowance for learning materials as defined by NSFAS. A policy for student housing is being developed.

Funding is being provided to TVET colleges specifically to cover 80% of student enrollments. Currently the subsidy is underfunded at 54% of enrollment coverage but in five years, the full 80% should be reached. For the very first time, a new allocation has been added to the baseline to deal with infrastructure. This fund will grow over the next five years, becoming part of the baseline going forward.

University budgets have been revised in terms of the new funding allocation.  Additional funding for university block grants in fiscal year 2018/19 increased by 14.6% across the board. This substantial increase will assist universities with their operations and challenges from the fee increase. Allocations in the form of earmarked grants provided funding for the clinical training of health professionals who are expected to return to South Africa to complete their medical training after studying in Cuba. 

Operational funds for new universities will ensure that operations are effectively funded without taking away from infrastructure. It will take a few years before funding for new universities will be moved into the main formula used for funding. 

NSFAS received a sizeable increase at 51.3% which will provide the funding for  university bursaries, allocations for unfunded, continuing and new students, and free higher education and training for poor and working class students. A total of R14.901 billion has been allocated for universities in 2018/19. 
 
Specifically regarding the allocations for TVET colleges for 2018/19, there are increases to the base line, an increase to 80% for the full cost of subsides and an infrastructure grant.

By year five, the subsidy will be fully funded to cover all enrollments. All funding is planned based on agreed enrollment plans which institutions must stick to. In terms of the best data available, 11% of student accommodation and meals and 18% of student transport will be covered. This year will test these amounts to achieve an accurate understanding next year.

Upfront payments were calculated at 15% of the preliminary 2018 allocation of each college and university. Every institution received that amount in January, this payment will enable them to cover NSFAS qualifying students in terms of tuition and allowances. TVET colleges are required to use 40% for of this funding for students’ tuition and fees and 60% for allowances.

In terms of intervention measures, two task teams have been designed to address utilization challenges. In the future, a policy development process must be put into place. There is no formal policy as of yet that can be implemented over time.

New students that are eligible to receive the bursary will need to sign an agreement form that differs from those prior to it. This new form will include conditions that require students to contribute to society in one of two ways:
-To remain in South Africa after completing their degree for however many years funding was received for. During this time the hope is that students will be working and contributing to the economy, not obtaining their education and leaving.
-Students must complete 10 day/80 hours of some kind of service work after their second year of studying.

Once the agreement is signed, students will receive their funding but not before.

NSFAS 2018 Update
Mr Steven Zwane, Chief Executive Officer, NSFAS, stated that he would like South Africans to know that the progress of NSFAS was made with the support of the Department. Although there were challenges, these were addressed and students were able to apply to universities and attend class. NSFAS has readied itself to deliver on the free education though 2018 will be a learning process.
It is an unfortunate situation where walk in students expect quick answers which creates stress on the system but service delivery must improve. NSFAS is working on the complaint that it is not reachable and is increasing its ability to respond to demands. Talks are currently underway with the board to consider an increase in NSFAS employee headcounts.

Mr Zwane would like South Africans to be reminded how big of a task it is to implement free education for those that previously benefited from loans. The biggest difference now is that NSFAS is moving away from a loan agreement and creating national bursary contracts.

Mr Zwane acknowledged that there was a strike taking place the past week. It created a disturbance in the process but the strike has been put on hold and the bargaining process has continued.

NSFAS 2018 Application Progress Report
Mr Ashveer Rajcoomar, Chief Information Officer, NSFAS, informed the Committee that the application systems were adjusted to assess students based on a R350 000 family income. The Minister of Finance announcement resulted in NSFAS receiving an additional R4.5bn increase for universities to be utilised to ensure new student entries are funded at the full cost of study. An additional R2.5bn was allocated for TVET colleges and will be mainly used to fund accommodations and transport.

To date, NSFAS has received 408,000 applications and have rejected 18,000 students due to their status as a returning student. This left NSFAS with 241,000 applications for university funding and 148,000 for TVET. For those that are accepted, the credit bureau asses’ family income.

Even though a lot has been achieved in the 2018 Application cycle compared to previous years, there have also been challenges. Some  of the critical challenges are listed below:
-As a results of changes in the sector, including the Presidential Pronouncement on Fee Free Higher Education, some of the NSFAS systems and processes were not flexible enough to respond to the changes during required short timeframes. This led to a lot of manual workarounds in order to make funding decisions;
-NSFAS require inputs from institutions and other stakeholders for decision making, this has been a major dependency particularly this year due to the Presidential pronouncement to ensure we minimise the risk identified by all key stakeholders;
-Some of these inputs were delayed, thereby impacting the speed at which NSFAS may make funding decisions. In other instances, the data was received with many errors or had missing fields. These inputs include:
-Admissions lists in order to confirm funding for FTENS;
-Academic results for returning students;
-Cost of qualifications required to estimate allowances for institutions.
-NSFAS human capacity and skills remains one of the key priorities for management. However, many positions in key areas have been filled in the last few months and has led to some improvement.

In order to complete all funding decisions and disbursement of allowances to students, NSFAS will focus on the following outcomes:
-Continuously engage institutions, with the support of USAf and DHET, to ensure that all student admissions are send to NSFAS for funding decisions: Target Date: 23rd February 2017.  Institutions have missed the agreed timelines, NSFAS has made a 2nd call to the institutions;
-Continuously engage institutions, with the support of USAf and DHET, to ensure that all academic results for returning students are submitted to NSFAS: Target Date: 02nd of March 2018.
-Complete funding decisions and communicate funding outcomes, including rejections, for FTENS and returning students. NB: Dependent on the two points above. Target Date: 02nd March 2018
-Communicate funding outcomes to rejected students – 02nd March 2018.
-Internal – Commence with Category 2 applications processing: Target date: 28th February 2018;

Discussion
Ms J Kilian (ANC) expressed concern and agitation at NSFAS in respect to how the entity submitted presentations to Parliament. The Committee had received a presentation late the night before only to arrive to the meeting and discover there was a different presentation it had not seen before. There were obvious tactics that presenters use when they want to hide facts, such as moving pages around and filling slides with complicated information. This is an old tactic which all Members are familiar with. The presentation may be beautiful but the facts are moved around. This is not the first time NSFAS has done this and it will not be accepted next time regardless of capacity concerns. There should be no secrecy or confidentiality regarding these documents, only complete transparency. There may have been some progress however; there is still a sense of concern. The DHET is receiving the highest increase from Treasury but the issue remains the question of capacity between both the department and NSFAS. To what extent is the NSFAS system ready to be rolled out to all institutions? Is there accountability in the Department for the TVET sector? How do you verify that the money being allocated to institutions is being utilised? This is a huge burden on NSFAS but somehow it must be resolved between NSFAS and the Department. How can the figures being presented be trusted? The Constitutional Court can find that oversight was not done properly. There seems to be no sense of urgency from the Department. She anticipated backlash from students regarding transport allowances which must be clarified. In regards to historic debt that NSFAS deals with, what happens to the rest? Finally, is the Department and NSFAS managing the TVET sector as a TVET sector or is it applying a university model to the sector?

Mr A Van Der Westhuizen (DA) shared Mrs Kilian’s anger about the presentation, also expressing his frustration and lack of confidence in NSFAS. As a matter of fact, the Committee was receiving many complaints from students and universities about the organisation. The presentation discussed upfront payments but did not mention delayed or outstanding payments of last year. Can NSFAS ensure that all outstanding debt amounts incurred by students have been fixed by now? If not, what amount is still outstanding? To what extent has NSFAS issued a protocol or format in which data between NSFAS and institutions will be shared? NSFAS is waiting to receive a large sum of money in the next financial year which begins in April but colleges are already carrying the cost of these students, when will these universities and colleges be repaid for the costs incurred from January to March? How do you see the future of the student-centered model? What should change so that the Department’s communication will improve?

Mr C Kekana (ANC) mentioned examples of various systems from banking to welfare that operate around the world, questioning if capacity is truly as difficult. The Department is approaching these issues as though they are brand new when they have in fact been implemented in many countries successfully for some time now. Could the Department bring a specialist in to boost technology and implement worldwide forms of best practice in South Africa? Regarding NSFAS, the oversight on the ground is very disappointing. There are students very eager to study that cannot access money from NSFAS. When discussing facilities, how come there are some TVET colleges with no workshops? If students do not study the appropriate way they may not obtain a job afterwards which is why all TVET colleges should have workshops.

Mr Kekana also noted that historically English and Afrikaans universities provide students with programmes in medicine and engineering which perpetuated racialised unemployment. Rural universities from previously disadvantages groups should have these programmes as well, why are those faculties not present in rural schools yet?

Dr B Bozzoli (DA) asked Dr Parker to clarify her remarks that the Department will reach 1% of the GDP? When will this claim be reached? What is the actual estimate of the number of students, not the percentage, that the Department visualizes will be covered by the scheme every year? Where does this 40% estimate come from? This percentage would account for 400,000 students based on current registration numbers of university students only. When will that 400,000 be reached and is that what the Department is aiming for? Presumably that number would go up as enrollment rises so is there some idea of the number of students the Department visualizes receiving free education? Is there going to be a cap? Has any of this been funded by internal cuts within the Department? If so, what are they and how are they justified? Or has most of the funding come from cuts to other departments? Right now, only about 90,000-100,000 students have been funded, that is the amount of students eligible for funding and accepted into a place in a university, is that number low, high, or as expected? Will it go up over time? Is this average number of first year students expected to be funded in the future? Addressing NSFAS, she noticed a dispute with the Department regarding the length of student funding. The Department supports n+1 funding, degree plus an additional year for any mishaps, whereas NSFAS supports continuing n+2 funding. In her view, n+2 funding was too generous, students especially now are unlikely to need the extra year because one of the most common reasons students fail is lack of funding which will no longer be a problem. In addition to the 90-100 thousand first year students receiving funding, 134 000 returning students will be funded. It is unclear what will happen to those students, will their money now come in the form of a grant or a loan? What does this do to cost assumptions? How does this affect budgeting? She reiterated previous comments about the NSFAS presentation which she considered to be appalling. The NSFAS presentation was full of figures which could not be understood unlike the Department which was clear cut. NSFAS should come back with a better presentation and an update after a month.

Ms S Mchunu (ANC) commended the significant budget increase for the subsides and infrastructure of the universities and TVET sector. Does the Department have the capacity within the TVET branch to monitor the infrastructure maintenance project? Do the TVET colleges have infrastructure maintenance plans and if not, what support is the Department providing? What will be done differently this time? There must be efficiency. This requires a presence of management on the ground. The Department’s presence has not been felt. Questioning NSFAS on the issue of centralisation, she asked what remedy has been developed to address this complaint by students? Regarding the conditions students must accept to receive their bursary, one condition is community service participation of ten days or 80 hours, how is this monitored? The other option would require students to remain in South Africa and participate in the economy in whichever way is most opportune for them for at least the number of years they had been funded for. What are students to do when there is no job opportunity for them within in the country yet they are forced to remain?

A Member of Parliament stated that the Department and NSFAS have done well given the task at hand. The representation from the Department shows there has been a lot of working together to ensure there is a level of understanding on directives. There are certain problems he would like both the Department and NSFAS to talk to. At one of the universities in the Eastern Cape before admissions could be completed, there were several fees that had to be paid by NSFAS before students could apply for their next intake. The university created acknowledgement of debt forms so they could identify the student and the debt amount, thus allowing them to come on for the next year. What is the process for this debt acknowledgment? Is the student assisted through NSFAS?

The Chairperson asked NSFAS when it was going to relocate from its office in Wynberg, Cape Town. This location was not accessible to many students. What is the Department going to do about this? NSFAS is an institution that interfaces with young people and therefore needs to be accessible to them.  Acknowledging that NSFAS uses social media which can be quite effective, she affirmed that there are many instances where students like to see the real thing and need to be able to walk in to an office and see for themselves how it works. Regarding the Public Finance Management Act (PFMA) as well as the Auditor General (AG), the Chairperson announced her fear that the latter will come back to the Department and say they have used money illegally. Without having provided a clear policy script, anyone can do anything and claim they thought that was how it must be done. To NSFAS, she requested a dedicated line of communication to this Committee of Parliament at the least. Raising the matter of the ethical conduct of the individuals receiving this money, what is NSFAS doing about this issue? Finally, the Chairperson expressed her own anger about the presentation given by NSFAS. It is not acceptable to put together a report hours before a meeting. The Committee has the responsibility to go through the information as well.

Dr Parker understood the concerns that were expressed by the members and will discuss these issues with NSFAS as well. The information in the Department’s presentation was not meant to be confidential although the universities have not heard what they will be getting yet. In terms of data, the problem is not an IT problem so it is not as easy to fix as just bringing someone else in. The problem is the integration of data and the quality or credibility of it as it is coming from the institutions. The major challenge is the TVET data, however, the TVET branch is working on this. In terms of assumptions being made in the presentation data, transport has been assumed which is a risk but the Department is prepared to work around this. There will be a clear understanding of transportation costs in five years. National Treasury is aware of these risks. The Department has been very deliberate in calling this a bursary scheme, this is not free higher education. There are still fees for all students; it is only the students that qualify for the bursary are then eligible to receive higher education at no cost. When it comes to allowance caps, the Department agrees there needs to be caps but right now, there are different allowances per student for food which is not okay, all should be able to eat the same.

In terms of students refusing to sign, Dr Parker believes students will sign because they now know they will have grants if they do so. NSFAS cannot disburse money if the students did not sign the forms. Regarding historic debt, the acknowledgement of debt form was created because student debt was causing a huge problem at the beginning of the year. Students came in with outstanding debt incurred for various reasons, one reason being expected family contributions did not align with the actual amount students owed. The acknowledgement of debt form was designed to process every student and record the actual amount that they owe. The Department will utilise some of the money coming into the subsides to get the debt out of the system. It is not realistic to go to the National Treasury and request more money. Future students will not have this debt so this will not be a continuing problem. The returning students will still be funded for n+2 however, they will no longer have a loan going forward, it will be a grant. New students will be funded for n+1 and it is critical to monitor all students receiving finical aid. Students will be utilising a platform, which was in testing last year, which will demand students log in and respond to questions on a monthly basis. This system is in place to ensure students get the proper assistance they need before it is too late. The system will also monitor students’ progress in school.

Mr Z Joubert, TVET Sector, DHET, responded that the funding received has been organised into a phased approach. Funding was prioritised into three pockets:
-Student fees (80% from the government 20% from the student out of pocket)
-Transport/ travel accommodations
-The balance
Enrollment numbers will be static for the next five years. When there is sufficient funding to cover the full 80%, then the system can be expanded. The only growth in enrollment anticipated is in the occupational programs.
Regarding TVET travel accommodations, the Department is working toward standardisation which is very difficult to do. For this year, colleges will use their own policies. When asking Treasury for this funding, the Department made assumptions with 11% for accommodation and 18% for travel. This was a very basic estimation but after a year, actual results will be available. Currently, 16 TVET colleges are being constructed, all sites will provide for workshops. These developments are putting extensive capacity strains on the Department and capacity problems are anticipated. The Department has established a unit for building maintenance and is developing a national infrastructure maintenance plan as well as a national infrastructure asset management system. The R1.3 billion allocated for maintenance will mostly be concentrated on current infrastructure where conditions are dire. When it comes to the issues pertaining to data, the problem is that there are four to five different systems utilised within 50 colleges that now must be integrated. The Department does not have the authority to intervene in colleges and demand what system they implement.

Mr Zwane stated that he takes the feedback about the presentation seriously. The presentation took away from the essence of what NSFAS wanted the Committee to know. He agreed that it does not help that NSFAS is located far from where the action takes place making it difficult to be active on the ground. Last year, NSFAS activated financial aid officers at universities and the student support services in TVET colleges to assist with this. Upfront payments are designed to cover the first quarter of the year in order to help institutions balance their books. NSFAS is looking to utilise upfront payment for students as well because they sometimes go months without having their allowances paid. NSFAS is still defining the service element of the student agreement for bursaries; however, they have until 2019 to work it out.

Mr Buti Manamela, Deputy Minister, provided an update on the university strike at Durban University of Technology (DUT). Subsequent to the meeting last week, the university and the unions requested that the Department facilitate a meeting between the parties in order to reach a settlement that would lead to the resumption of the academic programme. The unions have agreed to suspend the strike so that work will resume tomorrow. The university will revise its programme in order to catch up on the three weeks or so lost. Measures are also being put in place to remedy the 1,600 students that were unable to register due to the strike. This was a wage dispute which the department cannot meddle with; however, it is exciting that the parties have agreed to resume academic work.

The meeting was adjourned.

 

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