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AND RECREATION SELECT COMMITTEE
19 September 2007
NATIONAL STUDENT FINANCIAL AID SCHEME ANNUAL REPORT 2006/07
Chairperson: Mr B J Tolo (ANC, Mpumalanga)
Documents handed out:
National Student Financial Aid Scheme (NSFAS) Annual Report 2006/2007 presentation
Audio recording of meeting
The Committee was briefed by the National Student Financial Aid Scheme on its 2006/07 Annual Report. The briefing touched on its main focus and strategic goals and provided the Committee with a figurative comparison of its activities for 2006 and 2007. In as much as members were impressed with the work done by NSFAS concerns were raised over a number of issues. Accessibility of NSFAS to students in rural areas was a huge concern to members given that lack of funding for tertiary education was a common problem in their constituencies. The recurring problem of registration fees being payable upfront and financial exclusions at tertiary institutions were also discussed. Members also showed a keen interest on how the student loan process worked and highlighted discrepancies in the process.
The National Student Financial Aid Scheme delegation comprised of Ms Merle Festers: Acting Chief Operating Officer and Chief Financial Officer, Ms Linda Nhlumayo: Chief Operations Officer, Mr Xolani Gobelo: Communications Officer and Mr Julian Topkin: Information Technology Manager.
The Committee was given a brief background on NSFAS. Its strategic goal was to provide access to higher education for financially needy South Africans who were academically able in support of the country’s Human Resource Development Strategy whilst at the same time making a contribution to the alleviation of poverty. Ms Festers gave a with a breakdown of figures comparing 2006 with 2007. The comparison related to new grants that had been received, re-injected funds, loans that had been awarded, administration expenses, bursary wards, numbers of students that had been assisted, average award sizes, loans that had been repaid and the number of courses that students had passed. On average there had been increases across all the areas compared - besides the number of courses that students had passed. The number of courses that students had passed had decreased from 75.6% in 2006 to 73.8% in 2007.
Ms Festers explained the key parameters in order to qualify for assistance, touching on the maximum and minimum award amounts as well as the interest rates that were to be charged on loans. The annual awards had steadily increased since 1991 and so had the loan recoveries in recent years. During the financial year 2006/07 98% of NSFAS funds had been spent on direct awards to students and just under 2% had been used to cover administrations costs. The Committee was given a breakdown of bursaries available over the next three years. Ms Festers mentioned that the Auditor-General had given NSFAS a clean bill of health. She concluded that the way forward would be the continued focus of NSFAS on reaching all prospective and deserving students.
Ms F Mazibuko (ANC, Gauteng) was appreciative of the figures on the numbers of students that had been assisted by NSFAS but said that detailed figures of the numbers of students per institution would be even better. A breakdown of such figures per institution would be informative on the issue of financial exclusions. She also asked how NSFAS assisted students who did not have the registration fees upfront that tertiary institutions required. Ms Mazibuko additionally asked what other outreach programmes NSFAS had in place.
Ms Festers said that the figures would be forwarded to the Committee. She noted that the issue of financial exclusions was not necessarily straightforward. Each case needed to be considered on its own.
Ms Nhlumayo explained that tertiary institutions provide NSFAS with lists of students who do not have the funds for registration. NSFAS would then make funds available upfront for registrations.
Ms Festers noted that funding and outreach was a challenge. NSFAS however did have an outreach programme in place. Schools were visited and pamphlets were given out. Interaction with NGOs was also taking place. Mr Gobelo added that NSFAS was engaged in mass marketing. Schools were provided with posters and pamphlets. School libraries were also in the process of being supplied with literature on the subject. Open days and exhibitions were held with talks even being given at school farewells.
The Chair asked if students could be admitted to universities without registration fees.
Ms Festers noted that NSFAS had an arrangement with tertiary institutions to provide NSFAS with lists of qualifying students who require upfront payment of registration fees.
The Chair asked who conducted the means test on students.
Ms Festers replied that the parameters for the means test were put together by NSFAS. The actual testing was however conducted by the financial aid officers at tertiary institutions.
Mr M Thetjeng (DA, Limpopo Province) asked whether the financial aid officers at tertiary institutions were employed by the institutions or by NSFAS.
Ms Nhlumayo replied that financial aid officers were employees of the tertiary institutions and not employed by NSFAS.
Ms N Madlala-Magubane (ANC, Gauteng) stated that NSFAS was not well known in members’ constituencies.
Ms H Lamoela (DA, Western Cape) said that registration fees were especially a problem for rural students. She was aware that NSFAS did assist in covering registration fees partly but asked how it was done. She pointed out that the presentation had been quiet on challenges faced by NSFAS.
Ms J Vilakazi (IFP, KZN) said that tertiary institutions require students applying for financial assistance to bring in pay slips from their parents. She felt that even if parents earned well it did not mean that they could afford to send their kids to university, as they might have huge debts to service. She asked why was it that NSFAS provided the funds but it was the tertiary institutions that made the decisions on who received loans and bursaries.
Ms Nhlumayo replied that proof of income was needed as students compete for financial assistance. Some form of financial proof was needed. If no pay slip was available, an affidavit would suffice.
Ms Mazibuko said that she understood the difficulty in which NSFAS found itself. NSFAS could simply not give all applicants financial assistance. Some would be successful whereas others would not. She asked whether NSFAS had set benchmarks for what was required of students by tertiary institutions. She pointed out that the upfront payment of registration fees by NSFAS was not happening at ground level even though it was an option available to qualifying students. The bottom line was that the financial aid official at the institution made the decision and in many instances the decision was not questioned.
Ms Nhlumayo stated that NSFAS did in fact provide financial institutions with guidelines. Tertiary institutions were also audited by NSFAS. The reality was that many students often provided false financial information. A whistle blowing programme had been initiated at the University of Witwatersrand to stamp out the problem.
The National Credit Act required each financial aid officer to wear a name badge when interviewing students. The official’s decision could be appealed by a student.
Mr Thetjeng felt that the financial aid officials at tertiary institutions were not very helpful to students. It was a requirement to first be registered as a student before an application for a loan could be made. He felt the policy to be exclusionary and unfair. He pointed out that the problem was at tertiary institution level.
Ms Nhlumayo explained that there were temporary registrations at most institutions. Once a loan was granted to a student, the registration would be activated.
Ms Lamoela asked who monitored the situation at tertiary institutions at the beginning of each year.
Ms Nhlumayo said that she had worked with financial aid officers at tertiary institutions in her previous job and was aware of the members’ concerns. She pointed out that each tertiary institution should have a financial aid committee.
Mr Tolo asked if NSFAS made cash payments to students.
Ms Nhlumayo replied that cash payments to students were avoided as money was often used to buy luxury items such as clothes and cellphones.
The Committee was concerned that students in rural areas were not aware of NSFAS’s existence.
Mr Gobelo emphasized that NSFAS was heavily engaged in marketing itself throughout various provinces and that many such projects were taking place.
Ms Nhlumayo noted that many students were aware of NSFAS but were not interested in study loans. Bursaries were preferred.
Ms Masilo felt that NSFAS was mainly assisting students in the major cities.
Mr M Sulliman (ANC, NC) referred to recovered monies and asked what if all attempts by NSFAS to recover loans failed. Were the property and homes of defaulters attached?
Mr Thetjeng referred to figures of the total numbers of students assisted in 2006 and 2007 and asked what portion were new entrants to tertiary institutions. He referred to the requirement that applicants had to be SA citizens. His concern was that many false identity documents were in circulation so what mechanisms did NSFAS have in place, to address this issue. He asked what attempts had NSFAS made to sensitize loan recipients that, if they pay back loans, it would in turn assist another deserving student. He asked if it was perhaps possible to contact NSFAS directly for a loan, when a principal at a high school had identified a certain pupil as an excellent candidate for tertiary education.
Ms Festers replied that between 8000 and 9000 new students were assisted per year. She referred to the sensitizing of loan recipients and said that NSFAS intended to market this more aggressively.
Mr Topkin explained that NSFAS was systems intensive as opposed to labour intensive. He referred to the issue of IDs and said that an algorithm obtained from the Department of Home Affairs was used to check on the validity thereof. The recipient of a loan needed to be a SA born citizen.
Ms Madlala-Magubane asked how loans were recovered from students who were unemployed after completing their studies. She also asked why Mr Gobelo was alone tasked with handling communications.
Ms Festers explained that loans were income contingent. Only when a student had found work, would he or she be required to start paying back the loan. NSFAS however did not blacklist students and in the event that it happened by mistake, it would be rectified. She stated that NSFAS was in the process of expanding its communication portfolio. Vacant posts were also in the process of being filled.
Ms Mazibuko asked what the minimum income of parents must be in order to qualify for financial assistance.
Ms Nhlumayo stated that the means test no longer sets a minimum income amount. The test considered many factors such as income, expenses and tax. Financial aid officers should use their professional judgement in making a decision whilst at the same time being sensitive to the personal circumstances of the applicant.
The Chair asked why the student was interviewed and not the parent. The concern was that the student might not be fully aware of all the parents’ responsibilities and debts. He also asked how subjectivity in the interview process was avoided.
Ms Nhlumayo responded that if the student felt that subjectivity was an issue there was an appeals process. If the appeals process was unsuccessful, inventions by NSFAS was an option.
The Chair felt that matters were being left to chance and asked if students were even aware of the appeals process. He felt it to be a serious problem.
Mr Thetjeng agreed with the Chair. He stressed that the situation was bad at ground level and that perhaps matters needed to be referred directly to NSFAS.
Ms Festers conceded that NSFAS did recognize its challenges.
Ms Vilakazi was concerned about students who had been blacklisted after defaulting on loans.
Mr Tolo commented that legislation was in place to protect the unemployed from being blacklisted.
Ms Festers said that the National Credit Act had required NSFAS to remove past historical black-listings.
The Chair asked what happened to a loan recipient in the event that he or she failed.
Ms Nhlumayo explained that if a recipient failed outright, financial assistance was not continued for another year. She said that there was a sliding scale for various degrees of failure. Past academic results were taken into account in making the decision.
The Chair asked what happened when a loan recipient died. He also asked for the percentage of what had been paid on principal loan amounts by students or what percentage should be paid to NSFAS.
Ms Festers responded that with the approval of the board the debt would be written off. Mr Topkin said that it was difficult to quantify what should be received by NSFAS from students as students did not always keep in touch. NSFAS was reliant on students to keep them informed of what their current circumstances were. He noted that NSFAS did try to obtain figures on what was considered realistic amounts that should be recovered. The bottom line was that the loan was unsecured and that NSFAS was dependent on the student to make repayments once employment was obtained. The requirement was also that repayments were only required if earnings were above R30 000 per annum.
Ms Masilo asked how the reduction in the age of majority in terms of the Children’s Act impacted upon NSFAS.
Ms Festers replied that the reduction in the age of majority from 21 to 18 years affected the rollout of electronic loan forms. Previously delays were experienced as students had to obtain their parents signatures. The student no longer needed the parents’ signature and signed the form himself.
Ms Lamoela stated that schools often buy supplies from agents. She suggested that NSFAS brochures be left with the agents and when deliveries were made to schools the brochures would go along. It would save NSFAS the cost of posting or delivering them.
The Chair thanked the delegation for the presentation and stated that NSFAS should feel free to contact the Committee if any assistance was needed.
The meeting was adjourned.
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