National Student Financial Aid Scheme & Council on Higher Education Budget & Strategic Plan

Meeting report

National Student Financial Aid Scheme (NSFAS) Briefing:
Mr Pragasen Naicker, CEO, NSFAS, stated that the National Student Financial Aid Scheme’s (NSFAS) main mandate was to administer loans in a way that developed a strong sense of trust in how the institution functioned. An important addition to the Act that governed NSFAS was the inclusion of Further Education and Training (FET) colleges.

The institution’s main focus was to redress past discrimination and ensure representivity and equal access. NSFAS wanted to provide affordable and sustainable funding to students over a period of time.

Mr Naicker stated that NSFAS was restricted to providing access to public higher education and FET colleges; they did not provide funding to private colleges. NSFAS had to look at Government funding as well as other sources of funding in order for their strategic goals to be realised. One of the goals was to have an equitable distribution of funds through allocating funds in an optimal manner. Another goal was to communicate NSFAS effectively to all its audiences so that the institution became the funding channel of choice. Furthermore, it aimed for the effective governance, management and administration of NSFAS.

Between 2007 and 2008, there was an increase in the funds given to NSFAS, however it was not possible at this point in time for NSFAS to fund every single student who passed the mean test. The administration budget and costs were very low because the cost of financial aid officers in a tertiary institution was a cost that was carried by the institutions themselves. Administration costs were also kept low so that NSFAS could administer as much of the budget to students as possible. There would be a greater impact from specialist funding to take care of specialist needs. The Funza Lushaka fund was primarily a bursary that was directed at increasing the number of teachers in the country. There was also an increase in funding given to FET colleges.

Universities were not distributed equally in each province, so core allocations differed, according to how many public higher education institutions were in the provinces.

The maximum core award schemes were given to students so that they could concentrate on their studies without worrying about having food or accommodation. The minimum award was not a full service award.

An important new fund that was received from the Department of Social Development (DSD) was for the training of social workers. This was a direct response to the shortage of social workers in the country.

R100 million was allocated to the 50 FET colleges located in the nine provinces. The poorest FET colleges were allocated a substantial amount of money as part of resolving development issues that underlay education in the country. To date, R67 million was paid to FET colleges.

As part of the mandate, NSFAS was also expected to recover part of the loans from students who had passed through the system. Since implementation of the Recovery Fund Strategy, there had been a healthy increase in the amount of funds that NSFAS was able to recover. Recoveries contributed to the pool of funds that were made available for the next batch of students.

Areas of focus for 2008 included improving communications and development, giving more attention to areas that were under serviced, such as rural areas, participating in university open days, increasing partnerships with corporate South Africa and administering substantial increases in funding.

Discussion
The Chairperson asked why the figures in the slide headed “Expanding the Scheme” were higher than those in the expenditure summary.

Mr Naicker stated that the difference was due to budget creation, availability of funds and student agreements.

Ms Merle Festers, Chief Financial Officer, NSFAS, indicated it was the first year that bursary programmes were introduced into the system. It was also the first year of implementation and roll out. NSFAS hoped that the unutilised portion of funding would be added to the 2008 pool so that the money could be utilised.

Mr G Boinamo (ANC) commented that he was pleased to learn that rural areas would be attended to in the future. He asked what happened to funds that were given to students who later left their tertiary studies without graduating. Furthermore, he asked if those that graduated re offered assistance in the form of job placements. He also wanted to know if NSFAS bursaries were aimed at promoting those skills that were scarce in South Africa or if any student could apply.

Mr Naicker stated that the “dropout” rate was about 30% per year. NSFAS was producing a cost model to understand how much each “dropout” cost the institution. They wanted to track students from 2004 onwards to see the impact of the money that was made available. He was aware that some graduates struggled to find employment after graduation, even though the country suffered from skills shortages. NSFAS did not provide the service of helping students with job placements; they expected the careers offices at universities to do that. He noted that NSFAS received scarce skills funding from the Departments of Labour and Social Development. NSFAS managed the funding according to a scarce skills criterion.

Ms M Matsomela (ANC) noted that NSFAS was doing well where equal access was concerned, but wanted more information on representation in terms of bursaries. The application for the exemption from the National Credit Act requirements was supposed to be addressed some time before now, as it was a matter of urgency. She wanted to know why the process was taking so long.

Ms Festers answered that when NSFAS started out, they specifically targeted African students, but now NSFAS funding was open to all learners. The criteria for deciding who would receive funding included financial need and academic potential. Mr Naicker stated that NSFAS wanted to start supporting the working classes as well because they also needed access to further education.

Mr Naicker stated that the compliance officers within NSFAS looked at the process that the institution had to follow in order to apply for exemption. An appointment was set up with the Regulator and issues would be pursued. NSFAS was recently informed that the legal representative of the Regulator would be present at the meeting. By complying with the National Credit Act, NSFAS was left with a vast amount of documents from institutions and students that were holding up the process dramatically.  

Ms C Dudley (ACDP) wondered if the meeting with the Regulator was sufficient and if greater efforts needed to be made. The institution would have to increase its capacity greatly.

Mr R Van den Heever (ANC) addressed the Recovery Strategy. He wanted to know the percentage of recoveries and whether the amount constituted a fair percentage of recoveries that were envisaged. He asked how much of the funding was lost through non-payment and what incentives were given to encourage non-payers to conform. 

Ms Festers informed the Committee that NSFAS was looking at a provision for doubtful debt. NSFAS actuaries looked at recoveries over the last ten years and the current provision for doubtful debt was just over 20%. At the moment, NSFAS only wrote off debt from students who passed away and those with permanent disabilities. NSFAS was also looking at a second model of recovery to have an idea of the amount that they should actually be recovering.

Mr B Mosala (ANC) said that there were a number of students that were turned away because registration fees ranged from R5 000-R7 000. He wanted to know what role NSFAS could play in assisting those students who were turned away.

Mr Naicker said that he was aware that NSFAS had to be more involved in tertiary institutions’ activities. NSFAS planned to have a greater presence at registration, as they wanted a deeper understanding of what was happening at the point of registration. Letters were sent to tertiary institutions to inform them that NSFAS would be the agency that supplied the upfront money, yet students were still being sent away.

Mr Xolani Gobelo, Communications and Outreach Manager,  NSFAS, stated that the tertiary institutions were informed that NSFAS would pay the upfront fees for registration for students that passed the means test. NSFAS made these systems available to universities, but they were not always utilised.

Mr B Mthembu (ANC) looked at the allocation of fees. NSFAS indicated in their presentation that not all students who passed the mean test automatically received assistance. He was curious as to how they determined who would receive the funding, as it was his belief that the means test was the key to addressing poverty and granting access to further education.  

Mr Naicker stated that NSFAS functioned in partnership with tertiary institutions. Part of the requirement on the tertiary institution’s side was for the institution to offer the academic place. NSFAS funding would only come into effect after the academic place was offered. It was pointless taking a means test if one did not have an academic place, as this was a pre-condition for receiving a NSFAS loan. The budget that was given to NSFAS dictated how many people would be funded. All the tertiary institutions in the country were allocated a certain amount of the budget.

The Chairperson noted that the Committee could see the actual revenue budget for FET colleges. The Department of Education gave NSFAS an amount and the fund was exhausted in 2007. After exhausting the fund, the institution could then not fund other poor students who qualified for the funding according to the means test.

Ms Festers stated that there was a portion of unutilised monies. There was talk of funding fewer students, but funding them more fully, as institutions tried to spread funding and this resulted in unutilised portions. Initially, institutions did not allocate the entire budget given to them by NSFAS because they wanted to assist as many students as possible during any particular year.

The Chairperson said that the Committee was worried that the means test would imply to students that they qualified for loans, but then they would not receive them. NSFAS was given a budget but appeared to have underspent on the Funza Lushaka and FET projects. He wondered why learners who had passed the means test could not be funded if there was money available. This did not make sense.

Mr Naicker stated that he was concerned about this issue, as money was being returned to NSFAS after registration. It was his understanding that there was a multitude of problems as to why the funding was not used. Part of what the institution wanted to do in 2008 was to find out why funding was not used in a particular year.

The Chairperson interrupted Mr Naicker, saying that he did not want to hear statements about not having funding and needing more funding. He stated that no student could qualify through the means test, yet be driven away when the funding was available. He would understand if NSFAS was overspending on their budget.

Mr Naicker stated that the only time NSFAS was made aware of the students’ situations was after registration, when money was refunded.

The Chairperson said that the Committee did not want to blame funding. He wanted to know why NSFAS was not funding learners who passed the means test when the money was available. NSFAS was saying there were no funds, yet money was being returned from FETs and other institutions.

Mr Naicker admitted that the Chairperson was correct and that a much better understanding of what was happening at the institution was needed. 

Ms D Van Der Walt (DA) asked if students only from accredited FET colleges were funded. She added that at some point an audit would have to be completed in order to find out why students did not complete their tertiary studies. She was concerned about a matter of governance in the institution’s report. The work by the internal audit function revealed that monitoring of controls within NSFAS was inadequate, as there was no testing of the controls operating at head office by the internal audit function. The Auditor General stated that the performance objectives and indicators that were set by NSFAS itself were not fully measurable, and that the institution had not put systems in place and developed processes to report actual performance against determined objectives required by Treasury regulations.

Mr Naicker answered that NSFAS only worked with registered FET colleges and that they received the list of colleges from the Department of Education. Internal audits and control functions were put in place in February and the results would be shown in the next audit report.

Ms Festers informed the Committee that a substantial amount of work was done in defining the goals for the institution as well as for measurability.

The Chairperson announced that the Committee was running out of time and that Members could send any further questions to NSFAS in writing.

Council on Higher Education (CHE) Briefing
Dr Lis Lange, Acting CEO, Council on Higher Education, informed Members that in the eight years that the Council on Higher Education (CHE) existed, it had completed a number of publications as well as research. Some of this research formed the basis of advice for the Minister of Education. Research was done to assess the state of the higher education system and to establish the challenges and impacts that the policies had on the system.

The main focus of the CHE for the higher education institutions, the Ministry and the public in general was to look at research and the impacts of the implementation of new policies.

Up until now, the CHE only had four legislative areas of responsibility but recently the National Qualification Framework (NQF) and the new amendment to the Higher Education Act gave the CHE a fifth function. The CHE now advised the Minister, either on specific request or acting proactively, monitored the higher education system, assured and promoted the quality of Higher Education (HE), contributed to the development of HE and was also now involved in standard setting and generation.

The CHE set up a monitoring directorate that worked in three ways. A profile of all higher education institutions would be developed so that auditing processes could take place in 2008 and 2010, an information profile would be used to produce analyses of trends in different sub-sectors of HE, and a methodology would be developed to analyse the impact of differentiation on the HE system. 

In evaluation, the Monitoring and Advice directorate’s goals would be to identify areas for advice and further research, to produce reports on the State of the Quality of Provision in specific programme areas and to produce a report on the state of teaching and learning in South Africa. The Monitoring and Advice directorate’s goals with research were to conduct research on the impact of the different steering instruments in achieving the goals of HE policy, and to conduct research on the articulation between HE and high school sectors.

Quality assurance included implementation of the quality assurance system, deepening strategic interactions between different subsystems, deepening strategic interactions with monitoring and advice functions and continuation of monitoring the impact of the Higher Education Quality Committee (HEQC) on HE institutions.

The CHE experienced challenges with recruiting, developing and retaining highly skilled professional staff. They also struggled to enhance the overall organisational systems to respond to demands of the new format of the financial audit and to realign the organisational structure to meet its responsibilities.

Dr Jan Beukes, Chief Financial Officer, CHE, addressed the financial issues of the institution. He informed Members that when the CHE started, it was difficult to get funding from the State. This meant that the CHE was dependent on donor funding. In 2003/04 there was a significant increase in the State funding.

The HEQC represented the largest portion of the CHE funding, as it was a key issue in the institution. Government grants were the largest source of income. Donor funding was the second highest source of income but had tapered off in the past few years. Since 2006, there was a steady growth in the sources of income. In terms of income versus expenditure, there was a significant increase in state expenditure. The CHE had recently created the capacity and ability to utilise the full state allocation given to them.

An organisational system was introduced in the previous year whereby budgets and allocations to projects would be reviewed at least four times a year to ensure that there were not unutilised funds. The CHE accumulated a reserve fund of R20 million that came from transfer funds, donor funds and interest.  

Discussion
Mr Boinamo wanted to know the extent to which CHE could assist in ensuring that the challenge of the shortage of educators in scarce skills was adequately addressed. He commented that the country depended on higher institutions of learning to produce educators.

Dr Lange answered that one of the problems in addressing the issue of scarce skills was that there were too many institutions that focused on the same issue. The CHE participated in the Joint Initiative for Priority Skills (JIPSA) and in meetings of the Presidential working group on Higher Education. CHE looked at scarce skills from a different perspective. They understood that there was a needs analysis in terms of specific skills, which looked at more immediate needs of the labour market. The CHE was particularly concerned about the skills that the country lacked that could support the implementation of social development.  

Ms Matsomela wanted to know the point at which CHE monitored or evaluated the integration of programmes in different institutions. She asked if it was time for the CHE to do research on the merged institutions in order to establish whether or not goals were achieved and to advise the Minister accordingly. Members needed a report on the state of teaching and learning in South Africa. In terms of sources of income, she noted that CHE was anticipating a sharp reduction in other income for 2008 and an increase in 2009. She asked for the reasons for the fluctuation and what the impacts were on operations.

Dr Lange  stated that in the process of merging institutions, the integration of programmes happened last. The first few years of mergers concentrated on the integration of the payroll and other administrative issues, and the process of integrating programmes would be much slower. CHE felt that it was too early to assess the impact of the merger.

The report on the state of teaching and learning in South Africa would be sent to the Committee.

Dr Beukes said that the reason for the fluctuation was the phasing out of donor funding. There would be a major injection next year from CHE’s own reserve fund.

Ms Van Der Walt asked if the report on the state of teaching and learning would include advice or recommendations to the Minister. She also wanted to know where Members would find the institution’s Audit Report.

Dr Lange  informed the Member that the Annual Reports were posted yearly to Parliament and the Committee. The Annual Report was also available on the website. CHE’s evaluations on the state of teaching and learning in South Africa would be made available on the website and the Committee would receive a copy of the report.

Mr Theo Bhengu, Deputy Executive Director, CHE, stated that CHE wanted to do the report so that it could benefit the system on a variety of levels. It wanted to look at how the review of quality of teacher education would ultimately improve the quality of education in the country.

The Chairperson stated that it was very worrying that so many students were being turned away because they did not have full funding or they owed fees to the tertiary institution. He asked if any research was done on this subject and if this was an area that CHE was interested in.

Dr Lange  announced that CHE was using a different approach in terms of teaching and learning in general. This was a complicated issue where a national discussion was in order. Attempts were being made to find out why students left tertiary institutions before graduating. 

Adoption of Minutes
The Chair stated that since there were very few Members in attendance, the minutes could not be adopted.

The meeting was adjourned.