Higher Education Student Funding & National Student Financial Aid Scheme: briefing by Minister

Meeting report

EDUCATION PORTFOLIO COMMITTEE
8 March 2005
Higher Education Student Funding and National Student Financial Aid Scheme: briefing BY MINISTER

Chairperson: Mr S Mayatula (ANC)

Documents handed out:
Higher Education Student Funding

Summary
The Department presented an overview of student funding, paying special attention to the National Student Financial Aid Scheme (NSFAS). Twenty percent of South Africans between 20 and 24 are enrolled at university and technikon, up from 15% in 2000, but the real allocation of Rands had not kept pace. The Minister stated an intention to review the system more comprehensively with the Treasury. Discussion centred around the use of race as a proxy for need, the viability of reducing repayments, and the need to increase enrolment in the Further Education and Training sector (which is not covered by NSFAS)

Minutes

Minister’s briefing
Minister of Education, Ms Naledi Pandor, gave a brief history of NSFAS from its inception as the Tertiary Education Fund in 1992 with a budget of R10. The current budget of NSFAS was R1.2 billion. She stressed that there was no state policy to provide free higher education but the policy was to increase access to higher education. There were problems with the reach of the scheme and aspects of its current model in fully exploiting academic potential. She was also not sure that the scheme targeted scarce skills sufficiently. The present review of NSFAS would be cursory. Student financial aid should not be delinked from higher education funding as it currently was. The Department and the Treasury would analyse the current status of student financial aid and higher education funding more fully.

Higher education student funding
Dr Ahmed Essop, Chief Director of Higher Education Planning, then gave an overview of higher education student funding. There had been rapid growth (21%) in higher education enrolments over the last three years, with most growth in African enrolments, currently 60% of the total. Real versus nominal grants had however declined. Income derived from repayment of loans had increased. A very small portion (R5.5m) of the R948m income for 2004 was derived from the private sector.

Allocations to higher education institutions was made on the basis of the number of disadvantaged undergraduate students weighted according to their race group, enrolled in full-time study and the full cost of study, including residence. Between 1999 and 2003 there was a redistribution of funds to historically white institutions because African and coloured student enrolments in these institutions increased.

The NSFAS awards loans of R2 000 to R30 000 to students according to a national means test and according to the cost of study at the institution. Forty percent of this loan could be converted to a bursary on the basis of good academic performance. Interest is calculated by adding 2% to the rate of inflation. Loans were repayable after the graduate has attained an annual income of R26 300.

The drop-out rate of 40% was attributed partly to students’ inability to raise the balance of fees that were not covered by NSFAS. Two remedies could be considered: the number of students covered by the scheme could be decreased and the loans made to each increased or additional funding would have to be found.

Requests to stop charging interest on loans and/or to increase the portion of the loan that could be converted to a bursary had been considered and rejected because the rate of repayment of loans indicated that they did not overburden graduates and because NSFAS income, and therefore aid available to future students, would be reduced if this happened.

Both the disadvantaged student index (DSI) and the full cost of study (FCS) indices contained significant anomalies, impacted on the allocation of funds to higher education institutions and required revision. Previously foreign Africans were included in the DSI. This had been changed in 2005. The use of "black students" as a proxy for need did not take into account the varying socio-economic status of black students across institutions. The FCS further distorted the allocation formula in favour of historically white institutions as the costs of study were higher there than in historically black institutions.

Before the allocation formula could be changed, a better proxy to define need would have to be developed. The resulting redistribution of resources would have to be managed so that it did not undermine the sustainability of the whole system and access of the poor to it.

The problem of students having to pay their registration fees up front and before they had received their NSFAS loans had been alleviated by NSFAS providing institutions with advance allocations.

A problem that had not yet been solved was that many institutions were unable to plan their annual intake and assess the demand on their NSFAS allocation in advance because many students did not apply until registration.

Discussion
Ms H Zille (DA) paid tribute to the performance of NSFAS over 10 years, including its 2% administration fee and its policy of following the needy student and not the institution. She was disappointed to hear that race was used as a proxy for need. She asked for a disaggregation of the drop-out rate.

Mr D Montsitsi expressed pleasure about NSFAS students no longer having to pay their registration fees in advance and that the means test had been standardised. He expressed concern that merged institutions would discriminate against students from new satellite campuses and refuted Ms Zille’s assertion that race should be ignored when trying to determine a basis for need, because past inequalities that were based on race still persisted.

Ms L Maloney (ANC) asked if it was possible for institutions to track whether students had in fact migrated and not dropped out.

Mr G Boinamo (DA) repeated the request for loans to be interest-free, especially because the problem of unemployment made interest more burdensome and students were sometimes blacklisted.

Ms Pandor said that the definition of need was not race but a proxy, that there were white students who met conditions of means and were awarded loans but they were far fewer than black students. She commented that the success of the education system as a whole had resulted in more students with matric endorsement and resulted in more demands being placed on the higher education system. For Africans, the route to higher education was through university or a technikon and Further Education and Training (FET) colleges were not considered often enough. (Loans for study at FET institutions were not available from NSFAS.) On the drop-out rate, Ms Pandor commented that because loans did not cover the full cost of tuition and residence, students often jeopardised their studies by giving up their accommodation and camping on a friend’s floor or forgoing meals.

The allocations had not been awarded to single merged institutions, but on the basis of their components. In 2006 the Department would look at the institutional framework to ensure that institutions took their responsibility to needy students seriously.

Unemployed graduates were a problem, but there were not many of them.

Migrating students could in fact be tracked by NSFAS. The NSFAS system was so excellent that the South African Revenue Service made use of its database. NSFAS did not blacklist.

Ms M Mentor (ANC) supported Ms Pandor’s suggestion that more students should enrol at FET institutions because not everybody could or should go to university. She expressed concern about SAQA exit and entry levels. She commented that poor students found the facilities at tertiary institutions relatively luxurious and sometimes tried to protract their studies and became alienated from their families.

Mr A Mpontshane (IFP) asked a question about the court action brought by parents against the University of Cape Town (UCT) but this was deemed not relevant to the meeting because the matter concerned the University’s admissions policy, which was not determined by the State.

Mr I Vadi (ANC) asked why the cost of study varied so enormously between institutions; how many problems in the system stemmed from "massification"; and whether the ratio of students at college, technikon and university was correct.

Mr A Gaum (NNP) said that there should be a shift from technikon and university to FET colleges, but how was this to be effected if there was no financial aid?

Mr J Maake (ANC) said that a bigger proportion of NSFAS aid should be spent on students of science and technology.

Mr Essop said that the number of black students, not their needs, determined the allocation to higher education institutions. Ms Zille said that the funds, however, went to the students and not the institutions. Ms Pandor said that the matter was additionally complicated because although black students at Fort Hare, for instance, were more needy than students at UCT, the cost of tuition was higher at UCT. To marshal additional resources, Ms Pandor mentioned an American model that required everybody to contribute to further education.

Mr Essop said that in 1994, access to higher education was easier and had resulted in some institutions’ financial difficulties. "Revolving door students" did not assist the system and the Department tried to avoid the term. He agreed that the FET sector needed to be grown and attract students. He said that there should be differences in the cost of study at different higher education institutions but the Department was concerned about some of the variances.

Ms Pandor suggested that the Committee could invite institutions to explain how their costs were derived. The FET system would not be included in the more comprehensive review of higher education student funding but the Department would also look at in the context of provincial subsidies. Vocational guidance should be improved to increase enrolments at FET institutions, although adult should not be forgotten. The means test was 98.7% accurate. The ratio of students enrolled in study of science and technology related courses were based on the knowledge and skills of learners leaving school in matric.

The meeting was adjourned.