NSFAS on state of readiness for 2020 academic year

NCOP Education and Technology, Sports, Arts and Culture

11 March 2020
Chairperson: Mr M Nchabeleng (ANC, Limpopo)
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Meeting Summary

Having postponed the meeting the previous week due to the late submission of documents, the Select Committee was briefed by the National Student Financial Aid Scheme (NSFAS) as the Committee had sufficient time to engage with the presentation documents.

The Committee expressed concern about student accommodation such as lack of safety and inadequate living conditions. They asked how such accommodation is being paid for with NSFAS funding when external accommodation needs to meet the standards of the tertiary institution.

The factors leading to the 2020 student protests were discussed such as financial exclusion and the late payment of allowances. NSFAS assured the Committee that historical debt and the withholding of graduation certificates is no longer applicable as NSFAS has agreed to alleviate the historical debt of students.

The Committee emphasised the importance of NSFAS reaching out to small towns and rural communities to spread accurate information about applying to NSFAS and its benefits. Often these communities do not have access to amenities like electricity and the internet to obtain the information and yet these are the individuals who are in the greatest need of NSFAS assistance.

The NSFAS Administrator said that often when there is protest action, the blame falls on NSFAS when in reality the ineffectiveness of the system results from a combination of factors. These can include the debt at institutions created by the missing middle and the inefficient pay-out of NSFAS funds by higher education institutions. Therefore, it is important that communication improves between NSFAS, institutions and students.

The Committee wanted details about the corruption and fraud investigations, the irregular expenditure of R7.5 billion prior to NSFAS being put under administration in August 2018; sexual harassment claims within NSFAS; unequal treatment of funding allowances between universities and TVET colleges; as well as the lack of funding for postgraduate degrees.

The Committee commended NSFAS on its collaborative work with the Department of Home Affairs and the South African Social Security Agency (SASSA).

Meeting report

National Student Financial Aid Scheme (NSFAS) on state of readiness for 2020 academic year
Dr Randall Carolissen, NSFAS Administrator, explained the importance of a good relationship between NSFAS and the government in furthering progress and improved delivery. He attributed such progress to explaining to provincial MPs and MECs the provincial structures and mandate of NSFAS which allowed for better engagement.

Dr Carolissen noted the challenges being experienced at a tertiary level, such as interruptions to the academic year, challenges from the perspective of NSFAS and sharing ideas on improvement. There is a detailed report on disbursements and challenges experienced on particular campuses which NSFAS is willing to also share with the Select Committee.

NSFAS awareness and orientation
Dr Carolissen wanted to clarify that the application period to be considered eligible for NSFAS, is from September to November. Students only become funded when NSFAS receives registration data from the institution, demonstrating that the student is registered and academically eligible for funding. Therefore, over the festive season, the eligibility of over 500 000 students was determined. Consequently, when registration opened at universities and technical and vocational education and training colleges (TVET colleges), these institutions would have a list of eligible students. As a result, the Minister of Higher Education and Training requested that institutions register students without the upfront payment of a registration fee as these students are funded. Further, students would still be able to register despite historical debt from NSFAS as it will be settled by NSFAS.

Ideally, this is how the process should work but there are challenges such as walk-in students. These students have neither applied for NSFAS or to an institution and require quick processing in January and February when they wish to register. Walk-in students are especially problematic at TVET colleges. However, there has been a decline from last year, from 160 000 students to 120 000 walk-in students at TVET colleges. Despite the decline, walk-in students still place NSFAS under pressure due to the need ofr quick processing and creating potential conflict between NSFAS and institutions, which may not have yet received the funding to accommodate these students.

Another challenge is that NSFAS tends to receive registration data from institutions in early March which delays the process of determining disbursements to students. The proposed solution to this problem is to encourage institutions to register earlier.

An additional challenge is the upfront payments that NSFAS has resorted to making. NSFAS acknowledges there are poor students who arrive in late January and February and NSFAS’s response to accommodate these students is to make upfront payments to institutions. Institutions are then able to identify these students as NSFAS-eligible when they register and provide funding to sustain students for February.

Dr Carolissen went on to clarify the two types of NSFAS students:
- First time students are those entering the system for the first time who are dealt with at the NSFAS site.
- Continuing students are managed by the institution and provide NSFAS with the status of the student such as having passed and progressing to the following year. Continuing student do not need to reapply and continue to be funded. However, if they exceed the NSFAS N+ rule on the minimum time to complete a qualification, the institution can discontinue funding. In such cases, students have the opportunity to make an appeal to the institution if there are exceptional circumstances, and the institution will make a recommendation to NSFAS.

Another complication experienced by NSFAS is the operation of two funding regimes:
- Pre-2018 loan system
- Fully subsidised funding system.
The change in regime occurred when the President pronounced in December 2017 that the Department of Higher Education and Training (DHET) will introduce the new DHET Bursary Scheme for 2018 which fully subsidised funding for poor and working-class students at public universities and TVET colleges.

Dr Carolissen explained that the announcement to alleviate historical NSFAS debt applied to students in the system before 2018 as it was found that the R86 000 cap was insufficient in covering fees. As a result, NSFAS is in the process of determining and paying institutions to alleviate the debt of NSFAS students.

Household income of applicants is verified with information provided by the South African Revenue Service (SARS). However, if an applicant is a South African Social Security Agency (SASSA) recipient, they automatically qualify. However, a complication that arose was that of the 250 000 SASSA-recipient students, about 20 000 had to be pushed out of the system for further assessment. For example, a student may claim to be a SASSA recipient based on living off a grandparent’s grant despite there being no formal adoption or a living parent. In such cases, were parents cannot be found or have abandoned their children, NSFAS refers these applicants to a social worker to regularise their social welfare status before moving the student to a NSFAS funding status.

Dr Carolissen went on to explain that where relationships have been developed with local partners, there has been improvement in awareness of and understanding of NSFAS. This is important because in small towns and rural areas there is often very little known about NSFAS and its benefits. Therefore, by engaging with local organisations in areas such as the Northern Cape, Western Cape and KwaZulu-Natal, the numbers of applicants have increased.

There are various methods of disbursing funds to students. The voucher system was based on the idea that the voucher could only be spent at a particular retailer and on particular items such as books. Under this system, kickbacks were being received by the retailers and NSFAS, which meant that the system was set up for fraud. The intention was to keep cash out of the hands of students, but students circumvented this by paying for other people’s groceries and receiving the money for it. The voucher system was then abolished, and students were paid directly. Consequently, the system is now that disbursements and allowances are paid to the institutions, who in turn, pay the students. In case of TVET colleges, due to paying students late or the wrong amount, the NSFAS wallet system has been established in which NSFAS pays students directly into their own accounts. The wallet system used to work according to a cell phone system which created an opportunity for fraud. Consequently, NSFAS will now use a banking system where funds are paid directly into students’ accounts. However, there needs to be a process by which banks compete for this opportunity of paying students before the system becomes operative. The banking system adds to the existing NSFAS checks on the validity of the students, such as the banks having their own biometric checks and banks verifying information with Home Affairs.

Although the allowance system has been standardised, there is a difference between universities and TVET colleges, but this is an issue that NSFAS is taking up with DHET.

Dr Carolissen acknowledged that the NSFAS information and communication technology (ICT) system was failing. For instance, whilst the system was paying students it would crash for no apparent reason. However, NSFAS has been working on improving the system.

Dr Carolissen noted that irregular expenditure for 2017 and 2018 of R7.5 billion had been disclosed. Whilst NSFAS has been ‘de-risked’, there are some risks that remain, such as cyber security. NSFAS cyber security is rated on a scale of 1 to 5. NSFAS should be operating at a 4 but is actually below 1. Cyber security needs to improve to prevent attacks on the system that will move money around. NSFAS has being clamping down on fraud and corruption in NSFAS. This led to five employees being arrested and the removal of the entire top management. In combating corruption and fraud, there has been effective collaboration.

NSFAS readiness for 2020
Dr Carolissen explained that 99% of the allocated funds have been disbursed to eligible students. Last year, NSFAS was able to fund close to 730 000 students, resulting in disbursement of approximately R26 billion.

He acknowledged that TVET colleges are not yet the preferred option for students. Therefore, more awareness and education needs to occur about TVET colleges not merely being a second option for students unable to get into university. Myths need to be dispelled through education and awareness such as NSFAS only being for “African or black people” and that working for the government disqualifies you from NSFAS.

There has been an improvement in disabled applicants but NSFAS is still not where it should be on this, and this remains a challenge. A major challenge is delivering the special requirements of these students, such as wheelchairs or hearing aids, which are processed late and delivered later on in the year.

Dr Carolissen explained that 90 000 students provided insufficient documents for processing to determine eligibility. However, instead of asking the students for the relevant information, NSFAS worked with Home Affairs to get the necessary information on the behalf of students. This dropped the numbers of insufficient documents to 30 000.

He explained that rejection is based on two rounds of checking and on the information supplied. Therefore, NSFAS encourages students to notify and appeal if there have been any changes to their household. In such instances, there is often no appeal needed and the new information is immediately processed.

Ms M Gillion (ANC, Western Cape) acknowledged that a lot has been done and there is a willingness to assist but there is still a great deal of confusion. She noted the relationship between the institutions and NSFAS, specifically the Western Cape which she represents. In a TVET college in Stellenbosch, students in their second year have still not received funding. Another problem is that the relationship between University of the Western Cape (UWC) and NSFAS needs to be repaired. UWC was forcing students into certain accommodation as opposed to other accommodation that will be more comfortable. She had referred a matter of two students she had referred to the NSFAS office. The students continue to reside in Mitchells Plain instead of Parow as their parents would have to pay for the Parow accommodation. Consequently, NSFAS is being blamed for not providing funding and she hopes it will intervene in this matter.

She felt very strongly that a great disservice is being done to the students at the Parow TVET college as students staying near Voortrekker Road are unsafe. As a result parents are being forced to remove their children from this TVET college. Students are being robbed travelling to the Shoprite across the road and four students are forced to live in small rooms and the landlord is making money out of NSFAS. This is critical because parents cannot send their children to live far away to be unsafe.

She raised historical debt - an issue not isolated to KwaZulu-Natal - as many students and parents are unaware that they can apply for the write-off of historical debt. In the Western Cape, there are complaints that graduates are unable to receive their academic record due to an agreement that parents make monthly payments to cover outstanding fees that resulted from the pre-2018 loan scheme. Consequently, awareness programmes must be created about the possibility to apply for the alleviation of historical debt.

She was quite pleased that NSFAS is raising awareness in rural areas but due to some schools not raising awareness, more advocacy programmes are needed on NSFAS and its benefits. On the Cape Flats, people think NSFAS is exclusive to “Africans”; therefore there is a need for correct information to be given to communities.

She applauded the Administrator and his team for guiding NSFAS in the right direction away from fraud.

The communication between NSFAS, institutions and students needs to be improved so that situations such as burning of buildings at tertiary institutions, where students feel that the system is failing them, does not continue. She acknowledged that it is not only student representative councils involved in action and discussions of the system failing students. She suggested these other groups should be communicated with.

Ms D Christians (DA, Northern Cape) commended NSFAS on its drive to educate communities on NSFAS. Lack of awareness is a major problem in the Northern Cape especially since it is such a vast province. She finds it very disheartening that there are only 171 NSFAS students at the province’s only university, meaning that the majority are at TVET colleges in Kimberley, Upington and De Aar. Since the Northern Cape is one of the neediest provinces, she encouraged NSFAS do another drive to educate the communities.

She drew attention to the strikes at Upington and De Aar campuses due to disbursements not being received. At the moment there is uncertainty whether it is the institution that has not made the pay-out or if the disbursement was not made by NSFAS. She requested the assistance of NSFAS to determine what has happened on this matter.

She was concerned about the wallet disbursements. A problem earlier this year was that students failed to receive wallet disbursements; payments were made outside the normal system as far as she understood, and some students were paid twice. Therefore, what did NSFAS do to rectify the situation? Was the money retrieved? Will this happen again?

She was concerned about the NSFAS maladministration and sexual harassment cases. Whilst she is pleased that these matters are being dealt with appropriately, it is disappointing that these cases still exist. She requested NSFAS explain the progress in these cases, particularly the case involving one of its managers.

Then there was the matter of the irregular expenditure of R7.5 billion. Ms Christians struggled to understand how the previous administration did not report on this but this administration did. She was unsure if NSFAS has shared the irregular expenditure details with the Portfolio Committee but hoped that such details could be provided to this Committee by NSFAS; especially outstanding items and that need to be cleared up. She asked how far NSFAS was in rectifying its ICT system.

Ms S Luthuli (EFF, KwaZulu-Natal), speaking from the perspective of representing KwaZulu-Natal, believed that TVET colleges and universities are not treated equally in terms of food, book and travel allowances. This distinction in treatment has resulted in students not wishing to attend TVET colleges as they are aware they will be treated differently by NSFAS.

However, she commended NSFAS on working with SASSA. In doing so, NSFAS is able to identify those students who have are really in need. She hopes that NSFAS, SASSA and Home Affairs can work collaboratively to get information on the social beneficiary status of students.

She was concerned why students were not being funded when pursuing advanced diplomas. She said that she knew of three-year degree students who were funded for the first year but not for the second year. The reasons for this are still unknown.

KwaZulu-Natal is mostly rural so most individuals are not aware they can apply for NSFAS when they are in matric. Considering the lack of internet and electricity in rural areas, it is difficult for people to discover such information for themselves. Therefore, she suggested that NSFAS go to these communities and educate these individuals. She had further questions, but due to the time constraints, she will communicate these with NSFAS over email.

Mr M Bara (DA, Gauteng) found it disturbing that people entrusted to deliver services and support to students were those taking funds for themselves. They should be held accountable. Often institutions are blamed for failing students and not complying with their mandate when in reality they are being sabotaged from inside by corrupt individuals. This needs to be dealt with if NSFAS is to improve.

He noted that sometimes allowances for necessities, such as books, are used for other reasons. Therefore, he believed it necessary to have a system which ensures that students use their funding appropriately. He referred to instances where NSFAS cards were used to pay for other people’s groceries in exchange for cash. He is unsure how this is going to be addressed but something needs to be done. The intention of the card was to benefit students in spaces of higher learning, not merely to have cash available.

He explained that when then there are protests at tertiary institutions across the country about finances, NSFAS is often implicated. However, it is uncertain if the blame lies solely with NSFAS or with the institution itself. Such financial exclusion protests have occurred at the University of KwaZulu-Natal, Fort Hare University, Tshwane University of Technology (TUT) and CPUT. Therefore, he wished to know if NSFAS is disbursing funds to institutions, how is the money followed to ensure that it reaches the recipient to avoid students facing the risk of financial exclusion?

On the historical debt, in a county where unemployment is 29% and 55% of that is young people, he asked what measures can be put in place to assist young people in gaining access to the labour market without being hindered by what they owe NSFAS. It is important to address this because despite the transition from a loan to a fully subsidised bursary, the backlog of historical debt is a stain on NSFAS and its intended mandate. Therefore, he would like clarity on how this will be remedied.

Nonetheless, the most important issue is preventing protests during the academic year. Where is the breakdown between NSFAS and the institutions in ensuring that students get their money on time?

He noted that NSFAS has the ability to reach rural areas and a lack of applications does not mean there are no matriculants but rather that the service is not being accessed. The lack of access can prevent applications from being made on time. Students should be made aware that must not wait for their results to apply for NSFAS funding. NSFAS needs to be creative and reach out to these areas to assist in increasing applicants from deep rural areas, where a lack of internet and electricity hinders students to get the necessary information on deadlines and who to contact. Consequently, when considering advocacy, the focus should be on communicating the services that NSFAS provides such as using radio stations and newspapers. The current trend is for students to apply to institutions and funding after receiving their results which is too late. This can result in idle youth and involvement in poor decisions just as drug using.

Ms N Ndongeni (ANC, Eastern Cape) spoke in her mother tongue [01:31 – 01:36]. She asked if the system is easily accessible for application as when speaking to students, they seem to struggle in navigating the system. Funds for accommodation are sent to the institution, does NSFAS account for how many students are receiving accommodation and monitor this number? Can NSFAS forge relationship with municipalities in rural areas to help student gain access to application information?

Ms A Maleka (ANC, Mpumalanga) asked how NSFAS can manage the application process because to receive allowances requires a long process and extensive administrative work which can be stressful for students who are solely dependent on NSFAS. Another concern was that students were receiving their monthly allowance once every two months. She asked about the possibility of paying the institution for textbooks as opposed to giving students the money. Her final point was that students are funded for undergraduate degrees but what is the status of funding for postgraduate degrees?

The Chairperson commented that students at this tertiary level should not be micro-managed as they are young adults who need to learn responsibility. He explained that Parliament has two Houses. At this NCOP Select Committee meeting, Members speak from the perspective of their respective provinces so it would be appreciated to know about the engagements with the Portfolio Committee is on the progress of NSFAS so the NCOP Committee can be informed of what needs to occur at a micro-level.

On student accommodation, he believed NSFAS had specific standards about acceptable accommodation such as what is considered liveable and how many people can be live in one space. Further, building accommodation happens in collaboration with universities who verify the standard of the accommodation. Consequently, if accommodation was not approved by NSFAS or the institution, why is that accommodation being paid for?

NSFAS response
Dr Carolissen explained that NSFAS is an enormous organisation with a variety of stakeholders and reports to bodies besides the DHET such as the Departments of Social Development and Basic Education. NSFAS administers money to other bursary schemes beside those that fall under DHET. Consequently, NSFAS is developing into an institution that is more than a bank but one that is setting standards; such as forcing institutions to comply with its administration and sending out auditors to determine what institutions are doing with student disbursements. Therefore, he wishes to employ the assistance of this Committee to be “the eyes on the ground” and inform NSFAS of standards of accommodation and outreach programmes in towns and rural areas. In addition, this Committee is asked to assist in identifying malpractice and abuse.

He explained that the Minister has made a pronouncement that institutions must release certificates even if a student owes money to the institution as it is illogical to expect students to pay off their debt when they need their graduation certificate to get a job. Therefore, NSFAS implores the Committee to assist in ensuring that institutions are fulfilling this mandate.

Dr Carolissen explained that NSFAS has a small call centre of a 120 people that cannot accommodate servicing almost 800 000 students. Therefore, NSFAS encourages students to use their own portal that already has their personal information in order to have technical assistance such as changing passwords. NSFAS acknowledged that it has a challenge with its technology’s ability to service large volumes of students and has employed creative ways to work around this. For example, in Keimoes in the Northern Cape, 80 students were signed up because the first 10 students were trained in the application process and given cell phones to assist people in the line; which the Committee was very pleased to hear.

On the R7.5 billion in irregular expenditure, NSFAS made a report to the Standing Committee on Public Accounts (SCOPA) which NSFAS is happy to share with this committee. The original report stated that irregular spending was to the amount of R100 million. However, after investigation the amount was found to be R7.5 billion. The government cannot allow this level of regression to the point of NSFAS being so dysfunctional that it collapsed before the intervention.

Dr Carolissen acknowledged the unequal treatment of the TVET colleges and universities.

NSFAS funding is directed at undergraduate degrees to help students enter the labour market and the focus is to spread this opportunity as far as possible. However, there is a need for the development of high-level skills and there are discussions taking place with the Minister on the need to put more money into the National Research Foundation. Whilst this is to cater for postgraduate students, Dr Carolissen hopes NSFAS students will benefit. The continued funding of NSFAS students into postgraduate studies is a major problem and Dr Carolissen predicted, that during the year, the Minister will make an announcement about this.

The voucher system has stopped due to issues such as students paying for other people’s groceries. The textbook voucher system was being abused. Abuses included book sellers preventing students from accessing the credits due to them and forcing students to buy new books as opposed to accessible second-hand books. Dr Carolissen clarified that it is actually a teaching aid allowance. Therefore, limiting the use of the R5 000 to textbooks as opposed to purchasing of a digital device that will allow students to access information through downloads and streaming, prevents students from entering the Fourth Industrial Revolution. Further, there is only a small group of textbook retailers, who have monopolised the space and who benefitted from the textbook vouchers.

There should be no student still suffering from NSFAS historical debt. NSFAS has been working with universities to clear historical debt. They have informed universities not to hold back certificates from students as NSFAS guarantees that it will alleviate the debt.

Dr Carolissen explained that NSFAS has been speaking to municipalities about improving WIFI access.

He clarified that payments are usually made monthly and payment in bulk only occurred at the beginning of the year to compensate for the influx created by walk-in students which requires students to be paid double (the equivalent of two months). NSFAS ensures that money is transferred to institutions so that students are paid at the end of the month. The direct wallet payment system is used at TVET colleges and has been working fairly well. Where students have been overpaid, the money is recovered. However, with allowances being paid out by institutions, there have been cases of students not being paid on time or not all students receiving funding. Therefore, Dr Carolissen personally holds that there might be a need to transfer more institutions to the wallet system, otherwise there will continue to be late payments and disturbances.

In examining protest action, Dr Carolissen referred to the University of KwaZulu-Natal (UKZN) where, despite the large upfront payments made by NSFAS, the university failed to pay the money to its students. The UKZN R 1.5 billion debt is predominantly from the 'missing middle'. Therefore, while issues with NSFAS may contribute to protests on campus, another major contributing factor is the debt created by the missing middle and the quality and quantity of accommodation. If these challenges persist, there will continue to be disturbances even if NSFAS functions properly. NSFAS again implores the assistance of Committee members to alert the relevant parties to abuses of the system to prevent challenges accumulating.

He acknowledged that another major challenge is advocacy and communication. NSFAS tries its best within its budget to go to towns when they are invited but they will never be able to cover the entire country.

Dr Carolissen explained that the ICT system is to be replaced.The involvement of human checking in the system means that there will always be errors, but NSFAS is implementing additional checks and algorithms, in addition to cooperation from institutions to alert NSFAS to errors.

Matters of corruption and fraud are taken very seriously and continue to be dealt with. However, it is important not to be diverted by fake news and to be unnecessarily panic stricken. He encouraged the Committee to enquire from NSFAS about cases and abuse suspicions. They will be more than happy to share any pertinent information.

Dr Carolissen’s colleague referred to guidelines on the scope and programmes for postgraduate funding which are professionally driven such as the Bachelor of Laws (LLB) and the Postgraduate Certificate in Education (PGCE). On sexual harassment, she explained that NSFAS is not qualified to deal with such sensitive issues. Consequently, they have solicited the assistance of the Commission for Gender Equality. A CGE official will be sent to NSFAS who will provide guidance on how to proceed with further investigation into cases of sexual harassment. Such a strategy is important, because in order to encourage people to come forward and speak out, there needs to be a demonstration that they will be protected, that these cases will be taken seriously and those at fault will be held accountable.

She explained that funding might cease in a student’s second year based on academic progress. Whilst a student might still comply with the N+ rule, each institution has its own policies. For example, failing certain core modules might qualify an institution to stop funding. Consequently, cases where funding has stopped must be evaluated individually as a blanket approach will be ineffective.

In his concluding remarks, the Chairperson commented that often problems may not lie with NSFAS but are created by institutions not paying out funds. Therefore, Members must explain to their constituencies the reality of when institutions are not performing. Rule breakers must be held accountable to change the perception of corruption and fraud amongst those working for the government. He advised that if Members had more questions for NSFAS, these can be communicated through the Committee secretary and they will receive written responses.

The meeting was adjourned.

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