NSFAS progress report with stakeholder input

Meeting report

National Student Financial Aid Scheme (NSFAS) Administrator’s Report
Dr Randall Carolissen, NSFAS Administrator, indicated that he had been re-appointed for a second one-year term. NSFAS was funding about 45% of the university student population and in some cases all TVET College students.

The Minister of Higher Education and Training appointed Dr Carolissen as the Administrator for the National Student Financial Aid Scheme (NSFAS) in August 2018 after invoking Section 17A of the amended NSFAS Act  and placed the scheme under administration with these terms of reference:  
- Ensure the effective close out of the 2017 and 2018 student funding cycles.
- Oversee the opening of the 2019 online applications process.
- Develop, in consultation with Department, universities and colleges, a realistic plan 2019 funding cycle.
- Put in place the necessary management and governance controls.
- Ensure plans are in place to make funding decisions as close to the period of registration as possible.
- To manage the day-to-day work of the entity, and steer NSFAS to address its operational challenges fully.
- To work closely with the Ministerial Committee of Inquiry appointed by the Minister.
- To maintain a close and productive working relationship between NSFAS, universities and TVET colleges.

Dr Carolissen outlined the challenges faced in August 2018, the prioritised risks and mitigation plans and gave a progress report on the terms of reference and forensic investigations. The challenges included collapse in governance; system instability – as the system crashed on a daily basis; poor data architecture; compromised disbursement process; poor public credibility and poor organisational climate with no defined operational model.

He assured Members that there was a steady focus on strengthening cyber-security and implementation of management and governance controls. The IT system has been stabilised and there was momentum in the organisation.

NSFAS has disbursed more than R21 billion of the R22 billion budgeted for the 2018 funding cycle. Applications increased from 267 866 in 2018 to 546 499 for the 2019 academic year enabled by innovations to enhance application awareness. And;
- 93% of applicants had a funding decision by the end of January in time for the 2019 registration process
- 81% of the applications were successful subject to registering for an approved programme
- 7% had no funding decision as the application was incomplete.

Areas of focus of second  year of administration would be
• Conclusion of forensic investigations
• Appointment of new executive team
• Rebalancing management and technical human capital
• Review of all systems
• Entrenchment of quality management and governance
• Re-architecturing of data systems
• Further improvement in the integration of systems with institutions
• Transfer of skills from consultants and advisors to permanent staff
• Introduction of performance management and accountability framework.
 
Universities South Africa (USAf) on disbursement of NSFAS funding and allowances
As requested, Prof Sibongile Muthwa, USAf Funding Strategy Group chairperson, spoke about:
- The challenges experienced with NSFAS, particularly disbursements of allowances to students. She agreed with the NSFAS Administrator that significant improvement has occurred to restore stability to the Scheme and also to governance measures and system efficiencies, but much remains to be done.
- USAf’s contribution to work with stakeholders in finding collaborative solutions to the challenges
- Progress on commitments to work with stakeholders in finding collaborative solutions to challenges
- Measures put in place by USAf to ensure smooth processes during the 2020 application process
[See document for detailed analysis on challenges].

South African College of Principals (SACPO) on disbursement of NSFAS funding and allowances
Mr Sanele Mlotshwa, SACPO chairperson, said that the prevailing funding pressure continue to place pressures on the personnel budget of the colleges and consequently constrains the ability of colleges to cater for college operations. Most colleges were not able to recover part of the remaining 20% of the programme costs from NSFAS due to challenges experienced with NSFAS.

On the upfront payments, this allocation is made by NSFAS to ease the financial pressure to colleges. Upon receiving it, the colleges are to use it for student tuition fees and their allowances. It only applied to funded students. There are difficulties in utilising these funds at the beginning of the academic year due to a tedious process which often results in some students not being funded. However, there has been an improvement for the current year and most colleges have received their upfront payment.

He also touched on the roll out of the student-centred model which was introduced to ease the administrative burden and reduce delays in funds to students. The system proved to be good in theory, however the planning and readiness of NSFAS was not as good. A lot of processes were changed during the implementation stage of the model.
 
SACPO made the following recommendations:
- NSFAS must improve their bursary application portal urgently
- Urgently improve on the funding decision process of returning students
- Communication between NSFAS and TVETs need to be improved
- NSFAS to assign a dedicated person to work with each TVET college or pay colleges management fees
- Give TVET colleges access to download registrations already uploaded, as NSFAS promised to send them weekly to no avail
- Importantly, NSFAS must pay the agreed management fees so colleges can capacitate their bursary offices
 
South African Union of Students on disbursement of NSFAS funding and allowances
Mr Misheck Mugabe, SAUS president, said that SAUS advocated for a toll free number for students to direct queries. Calls are very expensive and issues that students want to submit to NSFAS are important issues that need to be registered with the Scheme.

Relationships with relevant stakeholders were currently being rebuilt by SAUS to assist in addressing student issues expeditiously.

On progress on commitments made, communication with stakeholders has improved over the past 12 months. SAUS had in the past felt that it was marginalised in engagements and sharing of information with stakeholders. Secondly, there were rapid responses to challenges due to the collaborative initiatives.

This year for the first time students received their book allowances in February. Previously students received the allowances in November which did not make sense. All students received their allowances every month and most importantly the meal allowances.

In conclusion, SAUS was considering conducting another financial aid road show as well as media campaigns. These initiatives helped with putting measures in place for the 2020 application process. An induction for SRC student leadership was recommended on funding of universities, particularly financial aid guidelines. A wrap around support program was recommended which would assist for mental health and other factors that affect students in institutions. They should be supported in these ways because most students on NSFAS come from poor backgrounds and are overloaded with other issues affecting them during their university careers. SAUS recommended provision of sanitary towels for female students.

South African Further Education and Training Student Association (SAFETSA)
Dr Diane Parker, DHET Deputy Director-General: University Education, indicated that SAFETSA had collapsed last year and the Minister had since corresponded with the Director General and Deputy Minister to commence a process of resuscitating the structure. The structure should involve various stakeholders within the higher learning sector. DHET was now working on hosting the elective conference and hopefully by October the structure will be established subject to the new guidelines by the working group.

Mr Thabo Mofokeng, SAFETSA working group member, said that the SAFETSA working group was happy with the current progress reported by NSFAS. SAFETSA had presented to the Committee before but now he would focus on matters that have not yet been attended to which were raised before.

• The student allowances allocated to university students were not equal to those given to TVET College students. This was a concern as TVET college students staying off campus paid the same for accommodation as university students. Therefore, it did not make sense why the amounts were not equal.

•  The majority of TVET colleges did not have student accommodation owned by the TVET colleges. Students were required to rent private accommodation and others stayed in informal settlements. SAFETSA proposed a review on the accommodation amounts.

•  There was an imbalance in resolving the historical debt of students. Those students could not register due to debt that has not been settled.

• The appeal process in TVET Colleges was problematic. The appeal process is twofold: a NSFAS appeal and academic appeal within the college. Some colleges never implemented the appeals for students. Both NSFAS and the DHET need to pay serious attention to this.

• Disbursement of allowances were being done by 24 TVET colleges instead of directly from NSFAS. However, the process was poorly managed due to a lack of capacity in personnel. SAFETSA then agreed with principals that TVET colleges had no capacity to disburse allowances. Some of the institutions have not been paid and others were still not paid historical allowances. There is a lack of monitoring from the department on the utilisation of the NSFAS funding in colleges. There were students that would sign a blank cheque – leaving students unaware of how much they had for accommodation and meals and how much was already paid for tuition. Flavius Mareka College college students have not been given statements on monies that have been paid.

• Some principals did not allow Student Representative Councils (SRCs) to engage them. Even worse, there are many students sitting with court interdicts for protesting in their institutions. Those students cannot engage with five or more students on campus despite some being student leaders.

•  Some Colleges principals did not, or rather, refused to account to the College Council. It was suggested that the powers of the principals in college structures should be reviewed and perhaps altered.

•  The content of the TVET college curriculum is rejected by the labour market. The end product is that TVET College graduates struggled to find employment. The curriculum review process should be expedited.

•  The forensic audit by NSFAS was noted and the forensic audits that have been implemented focused on corruption that took place in NSFAS. There is a need for these forensic audits to be conducted at TVET college level. NSFAS provides funding for students but the college utilises the money for operational purposes. He suggested that actions must be taken against those colleges. TVET Colleges must be made institutions of choice and promoted through infrastructure development, proper student accommodation as well as lecture theatres.

Discussion
The Chairperson thanked the stakeholders for the input. He had hoped that the Administrator would comment on the student that was paid millions by NSFAS. He sought an update on the matter.

Dr Carolissen advised that the forensic audits at NSFAS were done by DHET and its internal audit. NSFAS was busy exploring the outcomes. There was a lack of proper internal controls in NSFAS but those were being fixed and made tighter.

As for the student that was paid millions; the case was before the court. The money was actually disbursed by a third party agent not the university or NSFAS directly. About R802 000 was spent of the money disbursed and the money is being recovered from the third party agent. Internal controls are being strengthened to ensure the incident did not occur again. With that said, the team’s suspicion is that this was part of a broader syndication of crime attempting to get money from NSFAS.

The Chairperson asked Mr Mofokeng who had initiated the court interdict and on what basis.

Mr Mofokeng replied that it was principals who felt that student leadership was disrupting classes.

Ms J Mananiso (ANC) suggested that NSFAS should include time frames on its forensic audits and implementation of internal controls to assist the Committee on its oversight. She asked how far NSFAS has implemented the Auditor General's recommendations. What were the plans for NSFAS recruitment processes? It appears that most of these challenges crippling NSFAS stemmed from a very weak human resources function.

She probed whether NSFAS could assist in dealing with College Principals that allowed the funding to be utilised for operational purposes in their colleges.

If NSFAS could identify the relevant stakeholders and strengthen its relationship with them, many challenges would be addressed. For example, the department of health could assist in providing sanitary towels for girls coming from previously disadvantaged backgrounds. Strengthening relationships with the department of social development would assist NSFAS to identify students that are SASSA beneficiaries and be assisted.

Mr B Nodada (DA) lamented that the higher education sector was in crisis. Most of the inputs from the stakeholders were more reactive in nature. These problems could have been prevented. Throwing money into every problem was not going to produce sustainable solutions. The main problem is that money is being thrown at every problem, instead of focusing on coming up with preventative measures.

He asked Dr Carolissen directly if he believed that the current funding model was sustainable. Secondly, is there any prima facie evidence that vendors or “middle men” operating in providing students allowance have shown signs of fraud and corruption? And, what consequences emanated from that?

Mr Nodada asked what funds did NSFAS put into VBS Bank. NSFAS had a connection to VBS; he asked for clarity on that. What is NSFAS doing about the students that have unsigned contracts who are heavily dependent on funding? He asked for specific timelines for actions in resolving that.
Why is the TVET colleges allowance allocation different from the university? Who does the distribution of funding to TVET colleges. You find that some of the colleges have been accused of utilising the NSFAS allocation for other things. So what consequences do those college accounting officers face about that? What is the breakdown of the TVET College funding?

What is the quality of the NSFAS personnel; is it personnel that are politically deployed? He suggested an oversight visit to NSFAS, whether announced or unannounced – Members need to experience these things themselves. It is high time that people were made to account and not left to go by unaccounted for. Is there a cap on funding for students with disabilities?

Mr Nodada asked USAf if there is collaboration in assisting NSFAS with its IT system as universities already have systems in place. Universities already have the capacity to collate date and store it. What is the failure and success rate of the 100 000 appeals that USAf has been dealing with? Is there research or evidence about the effects of direct disbursements into bank accounts? Or is there a study underway so that Members can appraise this to make informed decisions. He agreed that there must be regional NSFAS offices, not only for the application process but also as a support structure.

In the stakeholder forums, do you ever have a discussion about TVET curriculum development? We are throwing money at every problem but what value is being derived from that?

How was NSFAS and the department mitigating the exam results delay to ensure that students received timely certificates?

The Chairperson said there should be a dedicated team to review the TVET sector. An Committee engagement on governance, funding, infrastructure, curriculum and examinations is due and needs a dedicated day.

Mr P Keetse (EFF) thanked USAf for sending its report in advance of the meeting. Members could not prepare adequately for the other stakeholders. Members seem happy with the progress of the NSFAS Administrator, but when one listens to the student delegation you hear a different story. He did not understand why the Administrator was appointed because there were a lot of challenges on the ground.

Education must be free for undergraduates, and if one looks at the numbers the country is not far from achieving that. Part of the Terms of Reference should have looked at the possibility of having fee-free education for students. As it stands, students have to reapply to NSFAS every year. What happens to the information that students supply when they apply to NSFAS for the first time. Things are not well at all. Students receive book allowance in October, and then they are expected to pass at the end of the year.

He emphasized that banks were also the “middle man”; they are the biggest beneficiaries of the system. We need to start discussing how the money should be disbursed to students without using banks.

Mr Keetse felt communication between NSFAS and the universities was a mess. Members were aware of the current challenges and the communication between NSFAS and universities and colleges was extremely poor. He asked if communication has improved and what was being done about the poor communication among stakeholders.

He blasted Vice Chancellor Sibongile Muthwa of Nelson Mandela University for congratulating the Administrator, Dr Carolissen for the “progress” in NSFAS. NMU was on the brink of a protest due to unresolved funding matters. He argued that she is supposed to put the Administrator to task.

Mr Keetse said the less Members spoke about the TVETs, the better because we have been stressing about this so much. Members have been told by the Department that money for infrastructure development has been provided but nothing happens. He suggested that books should be a separate matter and students should not be given the same book allowance as some students need more books than others.

Lastly, he asked how many students were funded by NSFAS and how many would be lost in the process.

Dr W Boshoff (FF+) asked if there was any reciprocity demanded from students for book and other allowances. Students do not always use the allowance money for what it is intended. It is necessary for students to pay in some way for what they receive from the State. If the State has to employ the students for a number of years, then that would be wonderful. It would force the TVETs and universities to tailor the curriculum according to the needs of the employer.

Mr W Letsie (ANC) said that the engagement has reiterated an important point that the biggest stakeholders are students. Therefore, whatever conclusion is arrived at it must speak to the needs of students.

To NSFAS, he said the presentation states 40% of the student population was funded by it. The relationship between NSFAS and the universities and TVET colleges makes the Scheme an important partner. It is clear that there is a communication challenge amongst the stakeholders and this affects the students.

On cyber-security, it was mentioned that some NSFAS staff members would make NSFAS payments from the leisure of their homes. Hopefully, the forensic report would deal with this matter as this is unacceptable.

He asked for the forensic audit reports to be made public upon completion. He suggested that the public needed to be know the investigation outcomes so that everyone can contribute to the solutions.

Can NSFAS commit to ensuring that by March 2020 the payments would have been paid?

He asked USAf for clarity on the NSFAS system that still funds outdated courses.

He supported the decision that students were given cash allowances so they start managing their own money. There is monopoly in the textbook sector; it appears that there are a number of underhand tactics. It remains a conundrum why academic textbooks are so expensive in all book stores.

As for fee-free education, he agreed with the concept but he thought it was unrealistic to apply to everybody. People that can afford higher learning education should pay for it.

Mr Letsie said that the lack of post graduate funding is a big challenge. NSFAS needs to play in that space because it speaks to knowledge production.

Ms N Mkhatshwa (ANC) said that it was about time fee-free education came to fruition. Government must commit itself to that. USAf needs to ensure that those on the ground managed the reality on the ground, otherwise these engagements were fruitless. She asked for a breakdown of how the allowance was structured. Can Members have an actual example of students that have deregistered after they received their allowances?

The Chairperson said that next week the Committee will receive a report on the TVET Colleges and the Department should include governance, management, profile and curriculum.

The Chairperson said that historic debt needs to be attended to by both NSFAS and the Department. It was mentioned that the R9 billion was allocated. The Department should provide clarity on this. How much of that amount has been allocated for historical debt?

He agreed with SAUS on sanitary towels, the Department should develop a policy and implement it as a matter of urgency. It should not be a NSFAS matter. He also agreed about the cash allowance for students. However, a more detailed and robust engagement needs to happen on learning materials. We cannot provide money for books and the money is not spent on books.  The way things are happening so swiftly in the sector, the Committee might need to be proactive and call in the stakeholders. This would assist to arrest the situation. Perhaps, Members should put into practice the idea of an activist Parliament.

Responses
Dr Carolissen replied about the application procedure, saying students do not apply every year and it is only when they fail that they have to reapply again and appeal. NSFAS underwrites the students for the courses that they applied for. At most and by far, most of the students sign online for contracts. As for SASSA, we already have a relationship with SASSA and pick up automatically if a student is a SASSA recipient.

On the pre-funded students, these students come from the department – the Funza Lushaka, the SETAs, and private institutions. These funds select their own students and NSFAS is dependent on the progress on selections. Lists are obtained from the Department of Basic Education around March or April. NSFAS has engaged DBE to provide the selections much earlier due to administrative challenges that come with those programmes. NSFAS suggested that the allowances were standardized to meet and match DHET allowances.

The current funding model, together with regional offices and fee-free education will be taken up to the inter-ministerial committee. The current funding model is sustainable but it must be properly administered so that a student’s livelihood was improved and is stress free.

On the VBS question, in 2017 NSFAS issued a tender for an electronic wallet system for students. The two banks that won the tender were VBS and Standard Bank. However, when VBS was placed under curatorship the contract with VBS was cancelled. He later engaged with Standard Bank and the parties agreed to cancel the contract because it was not handled well.

When we designed the 2019 funding model, we rated institutions and attached the risk for each institution in terms of its ability to disburse funds. Three or four colleges of the 50 in total indicated that they would not be able to. At that stage NSFAS designed the NSFAS wallet to pay students directly into their bank accounts. Initially it started with three colleges and it grew to 26 colleges, and we disbursed to those students directly. The other 24 colleges still disburse through the college system. In 2020, we intend to align the two systems and have direct disbursements to student bank accounts; 2020 was set due to a lot of planning that still needs to be undertaken. Hopefully, this will solve a lot of TVET related problems with disbursements.

On the delay in exam results, in the past TVET colleges submitted their results to the Department which would conduct the validations and submit them to NSFAS. That was a delayed process and to mitigate that, the results are being obtained directly from the colleges.

On the “middle man”, we had to remove all commercial interest from the disbursement value chain. Commercial interests must market to the students not to NSFAS.

On TVETs, we are establishing a TVET business branch within NSFAS. We have the business plan, the funding requirements, an identified strategy and the organogram – this can be shared to the Committee. This would ensure that the sector receives its intended focus.

The NSFAS IT head with TVET IT heads were currently attending an IT conference to see how we can better integrate our systems going forward. He had received an update on that and it was going well.

The internal audit capacity has now been in sourced, it was previously done by Ernst and Young – it is now a competency of NSFAS. We will now audit all institutions on a three year cycle and we have prioritised certain institutions.

Dr Carolissen confirmed that the allowances were addressed at Flavius Mareka College. The Administrator had just received confirmation.

On the forensic audits and how many people were arrested, four people have been charged. The rest will escalate as the forensic audits are being concluded – it is all based on prima facie evidence.

The process to engage Parliament is a prerogative of the Minister. The NSFAS team will brief and engage the Minister.

The total pool of historic debt is at about R1.6 billion. We have issued criteria to all institutions on who qualified for historical debt settlement. The submissions have been received. Many institutions followed the rules and guidelines and quality controls issued by NSFAS. We have only processed 10% of the submissions but the process was being expedited.

Dr Parker responded that the former President made an announcement on 16 December 2017 about a new fund that would be made available; a fully subsidized fee-free higher education. The free part was around tuition which meant that any first time entry students would get free tuition and that is being phased in over five years.  For TVET Colleges it was for all the students who qualified and they would receive tuition, course material and other allowances. The subsidy for universities was around meal allowances, transport, accommodation, and book allowance but that had to take into account the different circumstances of students. So looking at that we started understanding the different allowances that were required. DHET and its stakeholders had a short time to implement the announcement. The Department team actually met the following day in December 2017 to think through how the implementation would happen. The decision was that accommodation would only be made available to contact students not distance learning students. If the distance learning (UNISA) students would be taken into account, that would have significant implications for the fiscus.

Sanitary towels is already covered within the personal allowance which students receive. We should start thinking about whether male or female students should get equal amounts. It may be that female students could get more.

A big challenge is who should get accommodation as it is very expensive. In the TVET space there was a decision to work towards standardized accommodation depending on where the student lived. Some decisions were made including that the policy would be students who lived at home within a 30km radius from the campus would not get the accommodation allowance. However, they would get a transport allowance. An issue is that not all university campuses are the same and not all conditions are the same. So students that came from afar, they would get rental agreements and be supported for accommodation. She emphasized that a stable policy on the different problems identified was an urgent matter.  The Department is in a process at the moment to work out on these policy discussions with the stakeholders. There will be hard decisions that must be made due to fiscus constraints. Funding is limited.

We are not talking about free education for all here but we are funding about 45% of the university student population and more in the TVET sector. The policy on free education needs to be affordable and implementable. We cannot afford to provide free education to everybody and the policy needs to be fair, affordable and implementable.
 
The Department’s studies show that students funded by NSFAS were doing better academically than general students that were not funded by NSFAS. Students funded by NSFAS were performing at about 60%, while the rest were performing around 50%. This proves that the NSFAS funding was a good investment.

There are many longer term issues that we would need to deal with on the policy as well as operational matters for NSFAS. The Minister noted that a review on NSFAS would be done and the terms of reference were currently being put together. The most important thing is how we can work together and we are busy creating an eco-funding system. That involves all the stakeholders in the sector as well as students.

Dr Carolissen advised that with staff, the temptation is to fix the system and leave the staff. We will now focus on balancing the organisation – there are currently a lot of managers and fewer technical people. At the moment, he consulted IT people and those people need to be taken on a permanent basis.  We have prioritised staff development programmes although there were a few bad apples.

Mr Nodada asked if anyone was held accountable for the VBS contract.

Dr Carolissen replied that that will be looked at based on how certain decisions were made in the past.

In response to the Chairperson asking if any monies were lost in that contractual relationship, Dr Carolissen said that no money was lost.

A college principal representing SACPO said that SACPO distances itself  from those present that think principals are above the law or behaving like dictators at colleges. Hopefully, these issues would be dealt with outside the meeting. Communication has been improved with stakeholders. He confirmed that there were colleges currently on strike across the country except in the Western Cape. These strikes were related to NSFAS payments.

The Chairperson said that the TVET curriculum would be discussed in detail the following week.

Mr Mlotshwa, SACPO chairperson, said that he was grateful that the disbursements of allowances would be paid directly to the students.

Mr Mlotshwa added about the interdicts that the protests taking place in colleges were the reason principals resorted to interdicts. This was influenced by the violence and the destruction that came with the protests.

Mr Shai Makgoba, Director Risk & Compliance Management UCT and USAf Member, replied that the presentation sought to provide a high level briefing without going into specifics and details.  On communication with NSFAS, the Scheme has improved significantly. About the unsigned contracts, USAf assisted in getting the students to sign their contracts. However, the challenge was tracking students that live off campus and those that have left the institution. To curb the challenge, a contractor was contracted to assist in tracking students to sign their contracts. It benefited both students and the universities to have the contracts signed. On IT, NSFAS has made significant progress and USAf was happy with the developments achieved so far. Hopefully the Administrator focuses on building a team to resolve the challenges. It becomes a big risk for universities to advance funding to students. It can only do so if NSFAS is able to confirm. However, if the confirmation does not come forth quick enough, it is a challenge for universities to go ahead and advance.

The Chairperson thanked the Members and the stakeholders and adjourned the meeting.