ATC090820: Joint Report on Oversight visit to the (NSFAS)

Basic Education

Joint Report of the Portfolio Committees on Basic Education and Higher Education and Training on an oversight visit to the National Student Financial Aid Scheme (NSFAS), dated 18 August 2009


The Portfolio Committees on Basic Education and Higher Education and Training, having undertaken an oversight visit to the National Student Financial Aid Scheme (NSFAS) on 7 July 2009, report jointly as follows:


1. Introduction


1.1   The Portfolio Committees on Basic Education and Higher Education and Training, during the budget vote hearings, undertook to visit the NSFAS premises and engage with the entity more fully. The visit was undertaken on Tuesday, 7 July 2009 at the NSFAS  Officesin Wynberg, Cape Town.


1.2   The NSFAS is crucial to enabling access to education, particularly for the marginalized and poor. There are some crucial challenges being experienced by NSFAS, these are set out hereunder. The aim of the visit and interaction was to understand the nature and magnitude of these challenges being experienced and the type of support the Portfolio Committees could offer. It should also be noted that there is currently a review being conducted by the Higher Education ministry.


2. Composition of delegation


2.1 Parliamentary Delegation


2.1.1     The delegation from the Portfolio Committee on Basic Education comprised of Ms F I Chohan MP (Chairperson), Ms N Gina MP (ANC), Ms M T Kubayi MP (ANC), Ms N M Madlala MP (ANC), Ms N P Mkhulisi MP (ANC), Ms A C Mashishi MP (ANC), Dr J  CKloppers-Lourens MP (DA), Mr D C Smiles MP (DA), Mr M H Hoosen MP ( ID) and Mr N M Kganyago MP (UDM).


2.1.2     The delegation from the Portfolio Committee on Higher Education and Training comprised Mr M Fransman MP (Chairperson), Ms M T Kubayi MP (ANC), Mr G Lekgetho MP (ANC), Ms N M Magazi MP (ANC), Ms F F Mushwana MP (ANC), Ms  W J Nelson MP (ANC),Mr G G Boinamo MP(DA), Dr W G James MP (DA), Ms N Y Vukuza MP (Cope) and Mr M A Mangena MP (AZAPO).


2.1.3.    The Department of Education (DoE) was represented by Ms B Swart.


2.1.4          Administrative support for the visit included Mr A Kabingesi (Committee Secretary: Portfolio Committee on Higher Education and Training), Mr L Brown (Committee Secretary: Portfolio Committee on Basic Education), Mr D Bandi (Content Advisor), Mr AMphunga (Parliamentary Researcher) and Ms Z Ngoma (Committee Assistant).


           2.2 National Student Financial Aid Scheme (NSFAS) representation


2.2.1     The National Student Financial Aid Scheme (NSFAS) was represented by Mr P Naiker (Chief Executive Officer), Ms M Festers (Chief Financial Officer), Ms L Nhlumayo (Chief Operations Officer), Mr J February (Human Resource Manager), Ms B Feldman (Head-of-Department: Communications), Ms F Lewis (Head-ofDepartment: Research), Mr E Boonzaier (Internal Audit), Mr S Meyer (Information Technology) and Ms H Gordon (Personal Assistant to the Chief Executive Officer).



3.       Background and overview of NSFAS


3.1 In 1999, the government of South Africa recognized that there was a need for an interventionist mechanism to redress the legacy of Apartheid that resulted in school leaving students not continuing their studies to the tertiary level. Inter-alia this failure to continue studies at Higher Education Institutions (HEI’s) was due to immense poverty that plagued many South African households. A finance mechanism was conceived to replace the previous Tertiary Education Fund for South Africa (TEFSA), which had been established in 1991 as a not–for-profit company, administering a national scheme of student bursaries and loans, and primarily funded by the European Union. To replace TEFSA, the National Students Financial Aid Scheme Act of 1999 was enacted and is responsible for administering and allocating loans and bursaries to eligible students, developing criteria and conditions for granting loans and bursaries in consultation with the Minister of Education, raising funds and recovering loans, maintaining and analysing a database, and researching the most effective ways to use financial resources. The NSFAS also advises the Minister on student financial aid.


3.2 Since its inception, NSFAS has grown considerably in terms of the amount of money available for annual disbursement and the diversification of the Scheme. In 2007, the mandate of NSFAS was extended to include the administering of three new bursaries: bursaries for Further Education and Training (FET) students, Funza Lushaka bursary scheme for teacher education, and bursaries for training social workers via the Department of Social Development. NSFAS also administers private sector funded bursaries but is not responsible for identifying suitable students for the bursaries. Donors determine academic admission criteria and exit conditions applicable on graduation.


4. The Scheme and its operation


4.1        Students who wish to enroll at universities and universities of technology apply to the relevant higher education institution (HEI) for registration. There they are advised that should they require financial aid from the NSFAS they are to submit the necessary application form which is processed by the HEIs’ Financial Aid Offices. The HEIs recommend the amount of the aid to be given to the students from bulk allocations afforded the institution by NSFAS. Each allocation is based on actual student enrolment numbers for the previous year, using an apportionment factor, weighted in favour of previously disadvantaged students. Roughly three quarters of the allocation to an HEI is awarded to existing students and roughly a quarter is reserved for first year students by the HEIs themselves. There are no standard NSFAS forms and HEIs issue their own. There exists a means test which is electronically applied and a ranking of students most in need is produced based on an expected family contribution quotient. The HEIs’ financial aid committees then decide on whether a full loan or partial loan is granted to the student concerned. This process is applied differently in different HEIs. A pre-agreement statement and quotation is signed by the student whereafter NSFAS produces a loan agreement which is then signed by the student. Upon completion a payment claim letter is sent by the HEI to NSFAS and within approximately 30 days a payment is made to the fee account of the student in the HEI. Upon completion of his or her studies, a student will be expected to repay the full loan or 60% thereof if he or she has passed all subjects. Repayment only happens once the recipient is in employment and earning above a threshold level of R30 000.00 per annum.


4.2        In respect of FET Colleges, the allocation and distribution of funds is determined by the Department of Higher Education and Training (FETCollege branch) and communicated to NSFAS accordingly.


4.3        During 2007 and 2008 the following amounts were disbursed by way of loans to needy         students:


Table 1: NSFAS annual funding by source


NSFAS received total funding of R1.9 billion in 2007, which increased to R2.5 billion in 2008 for disbursement to needy students. It received increased funding from the Department of Education for the general education category. This increased from R1.4 billion in 2007 to R1.6 billion in 2008. In this same period, targeted scarce skills funding (from the Department of Education and other sources) for HEIs and FET colleges increased from R364 million to R705 million. 


Of the total funding received from the Department of Education, HEIs and FET colleges under-spent by R89.3 million in 2007 and R95.5 million in 2008. This constitutes under-spending of 5 per cent in 2007 and 4 per cent in 2008. 


Spending performance per source in 2008 reflects under spending of 2 per cent in general education, 1 per cent in ring-fenced teacher education, 5 per cent each in targeted scarce skills of Funza Lushaka teacher bursaries and FET college bursaries. Significant under-spending occurred in disability bursaries (61 per cent), top-up funding (46 per cent) and reparation fund (93 per cent).

Among other things, NSFAS attributes under-spending to the following*:


·         The unspent DoE general education funds (and NSFAS recovered funds) are a result of late reporting by HEIs on the uptake of funds which prevented NSFAS from redistributing the balance within the 2008 academic year.

·         Utilisation of funding for students with disabilities is dependent on the number of suitable candidates.

·         Non-utilisation of top-up funding is a result of this funding being available only at the end of academic year.

·         Utilisation of scarce skills funding (e.g. bursaries for teacher training) is dependent on availability of suitable candidates.

·         Recipients of the Reparation Fund are identified by DoE through TRC hearings.

·         Donors determine academic admission criteria and exit conditions applicable on graduation.

(*Source: NSFAS Budget Report to Portfolio Committees on Education, 2009)


Table 2: 2008 Allocations utilised with 2007 and 2006 Comparatives


                                         Allocation  (R)



2008                 Utilised           %              

Tshwane University of Technology

140 930 000

167 107 738

190 719 374     183 908 955     94

University of Johannesburg

98 782 000

118 170 000

136 347 816     135 668 223   99                  

University of KwaZulu-Natal

96 158 000

108 221 000

123 619 257     123 520 378    100

Durban University of Technology

76 711 000


89 976 000


106 654 490      92 727 376      87                


Vaal University of Technology

58 693 000

69 003 000

80 027 357        79 273 462       99

University of Pretoria

56 357 000

65 001 000

78 140 354        73 957 141       94

University of South Africa

54 482 080

64 740 570

72 894 000        68 508 066       94

University of Limpopo (Turfloop)


42 616 500


16 265 500

53 908 050


17 486 000

72 312 554        72 293 711      100


18 022 624        18 022 624      100

University of the Witwatersrand

53 128 000

58 237 000

66 977 000        66 887 917      100

University of Venda

36 615 799

46 102 170

66 181 956        60 649 982       92

Nelson Mandela MetropolitanUniversity

44 794 944

52 897 000

62 480 250        59 861 020       95

North-West University

46 479 000

50 921 000

59 652 391        59 238 200      99

University of the Western Cape 

39 446 000

45 364 000

55 063 374        52 662 993      96

University of Zululand

36 253 000

58 237 000

53 755 911        53 642 456     100

Free State University

38 211 873

44 213 499

49 710 250        49 710 247     100

Mangosuthu Technikon

33 539 000

39 305 000

48 811 357       48 243 247        99

University of Cape Town

38 250 000

41 520 143

48 781 291       48 490 395      100

Cape Peninsula University of Technology (Cape Town)

Bellville Campus

32 802 985


37 833 071

40 185 000


42 773 118

47 667 482       47 529 733      100


46 743 441       45 807 664        98      

Central University of Technology

38 250 000

43 059 000

49 170 961       48 792 261        99

Walter Sisulu University(Butterworth)

Mthatha Campus

Berlin Campus

26 015 000


29 776 000

17 346 000

30 790 000


34 001 000

20 793 000

40 015 362       40 015 362       100


39 953 108       38 721 653        97

26 188 188       25 116 152        96

Fort Hare University

21 630 000

24 513 000

31 792 532       29 053 880        91

Stellenbosch University

10 407 000

14 763 882

14 940 946       14 887 714       100        

Rhodes University

6 769 248

7 887 709

  9 203 392         9 101 192        99

Source: NSFAS Budget Report to Portfolio Committees on Education, 2009



Table 2 gives a breakdown of allocations per HEI during the past few years. In total, amounts allocated to HEIs increased from R1 billion in 2006 to R1.7 billion in 2008. Institutions that received the highest funding in 2008 included Tshwane University of Technology (R184 million), the Universityof Johannesburg (R136 million), the University of Kwa-Zulu Natal (R124 million) and Durban University of Technology (R107 million).


Of the total funding received, HEIs under-spent by R49 534 044, (3%) in 2008.


5. On Site Tour


The Committees were taken on a site tour of the NSFAS offices and facilities. These included, amongst others, the Communication and Development Unit, Information Technology Unit, Call-centre, Institution Liaison and Awards Unit, Information Analysis Unit and other units giving the Committees a feel for the operations of NSFAS (Information on the work of organizational units within NSFAS has been given as Appendix A).


6. Deliberations and Recommendations


6.1During extensive deliberations the following issues were canvassed:


  • The office space is inadequate for the massive volumes of paper work and application forms that are processed by the scheme. The scheme runs a loans recovery programme simultaneously and therefore a bigger more conducive environment is required. The committees were advised that the board was currently in the process of searching for bigger premises.


  • Some Higher Education Institutions grant full loans to needy students, but others do not. This was for various reasons including the extent of the uptake of the loans at a particular HEI. If the demand is greater and the allocation made cannot accommodate full loans, then students who are financially needy stand to obtain only partial loans and this leads to a high drop out rate. The fact that the outcomes for students at different institutions may be different, results in inequitable treatment of applicants and this is also a matter of serious concern. The committee felt that it was unfair for a student who qualified for a loan to be granted a partial loan, and urged the NSFAS to play a more pro-active role in setting in place an overall policy guiding the allocation of partial loans.


  • Access to NSFAS is extremely difficult for school leavers because of the geographic location of NSFAS at tertiary institutions. There is accordingly a need to ensure that high schools are equipped with information about NSFAS and how students may be able to finance their studies. This lack of access and information about NSFAS is in addition, exacerbated by the lack of vocational guidance and career information at school level. An interface at schools is vital to enable informed access to higher education, particularly in rural areas. NSFAS raised the lack of sufficient vocational guidance at school level to enable students to access the spectrum of options. This in turn results in scarce skills loans not being accessed by students as these areas of study are not ‘popular’, -and not because prospective students lack the ability to complete these courses.


  • The fact that the registration process takes place in the short space of  two weeks in the year that school leavers have left school finally, hinders effective planning and resourcing, both at the level of HEIs and NSFAS. Allocations to HEIs are based on previous enrollment figures. A more drawn out registration process would not only enhance planning and ensure more adequate funding, but would allow students to reconsider their attitude with regard to training in fields of study that are considered scarce.  A radical shift from the current practice of a two week period is therefore required.


6.2It was agreed that NSFAS would supply the Committees with the following information:


·         a synopsis of students who have been through the NSFAS system for the past 3 years;


·         a report on the research conducted in respect of what impedes access to the scheme;


·         a report on the percentage pass rate and “drop-outs” amongst NSFAS participants;


·         a report on how the means test is applied;


·         a graph showing the funding received by the various universities across South Africa;


·         policy guidelines in respect of “top-slicing” or partial loans.


7. The committees noted that there is currently a ministerial review of NSFAS and expressed the hope that the review will build on what has already been achieved in order to enable the scheme to be even more effective.


8. The Chairpersons thanked NSFAS for hosting them and invited NSFAS to use the Committees as a platform to showcase the institution.



Appendix A: Organisational Units within NSFAS


The following are key organizational units within NSFAS:


The Communications and Development Unit (Reporting to the Communications and Development Officer)


The Communications and Development Unit is responsible for communicating information about what NSFAS offers to students. This is done through NSFAS partnerships with 23 NGOs, which work with communities and which talk to those communities about the services of NSFAS. Other elements of the communication role include: attending career exhibitions, open days and community events; school visits; training of Life Orientation; making brochures available to all public schools and universities; a physical presence on campuses during the registration period; working with the Marketing Departments at institutions; and the use of media. The Department is also responsible for looking at ways of working with the private sector to raise additional funds and provide bursaries for skills needed by private sector companies.


The Information Technology Unit (Reporting to the IT Manager)


The Information Technology Unit is structured into two sections, i.e. Software Development and Network and Desktop Support. There are 7 employees in the unit, with the IT manager position being currently vacant. The Network and Desktop Support section, which comprises of 3 staff members (1 service desk, 1 support, 1 senior) is responsible for, amongst others, the upkeep of the NSFAS network and server infrastructure, and providing desktop support for the users within the organization. The Software Development section consists of 4 staff members (2 junior developers, 1 mid-level developer and 1 Senior Developer - there is a vacancy for another mid-level developer). It is responsible for the upkeep and maintenance of all systems that are developed internally by NSFAS. These systems include the LMS system and its integrated subsystems (e.g. the e-LAF system, Telephony, ACCPAC Integration, etc), the NSFAS website and the stand-alone Mean Test.


Awards Administration Unit (Reporting to COO)


The Awards Administration department is divided into two sections namely 1) Institution Liaison Team (11 staff members headed by a supervisor); and 2) Data Capturing and processing (2 permanent and 6 temporary staff, headed by a supervisor). As a team, ILT is responsible for receiving claims (known as batches) from the FET Colleges and Higher Education institutions (HEIs). These batches (received by courier delivery, hand delivered or post-office) include the name of the institution, the claim number, the number of loan agreement forms (HEIs) or Schedule of Particulars (FETCs) and are logged onto the Loan Management System (LMS) with the date received and all tracking and waybill numbers. Once this batch has been received, a batch is created on LMS where the institution name, donor, year, number of forms and the amount claimed is captured. The Data Capturing and processing team is responsible for processing these batches by checking forms with the control list and claim letter supplied by the HEI/FETC, validating student ID numbers, and checking student’s name, surname, student number and amount of the loan. A payment letter is generated indicating the allocation of the institution and donor, payments already effected and the current payment and balance. The returns (faulty forms) will be returned to the institution. Copies of these payment letters and the input sheet (LMS) are forwarded to the Finance unit. From this point, the DCAP unit capture all claims as per the payments that have been effected and this information is reconciled, forms are scanned and electronically filed and the physical forms are sent off site to Metrofile.


Customer Care & Collections Unit (Reporting to the COO)


In summary, the CCC Team is responsible for collecting/recovering outstanding loans from debtors which are then reinserted into the awards pool for distribution to students in the subsequent year. The department is managed by the Customer Care and Collections manager and is structured in 2 sections namely:

1) Customer Service /Call Centre/Tracing/Legal – 11 Permanent Staff members (managed by a supervisor)

2. Administration Section – 6 Permanent Staff (managed by a supervisor).

The Customer Service Call Centre section is responsible for handling the inbound Call Centre which deals with calls pertaining to payment arrangements, loan queries, and enquiries on loan applications from the public (including primarily the debtors themselves, employers, HEIs and the State). This section is the first point of contact to initiate action for any of the above duties. All the processes outlined the Procedure manual and Loan Recovery strategy is with provision of NSFAS Act 56 of 1999.

The Call Centre has 2 sub divisions, as below:

a) Legal Section- The staff in this division handling incoming legal queries from loanees and employers that have received notices from NSFAS, and/or our attorney Mathew Walton;

b) Tracing Section – This section focuses on the outbound activity (follow up and tracing) performed primarily based on information received from institutions like SARS and Independent Trust Corporation (ITC), both of which in accordance with Act 56 of 1999 supply NSFAS with the most current records of loanees on our database from whom we are not able to recover loans - for various reasons (most likely due to no contact from the loanee and many motives are linked to this i.e.: unknown addresses or default). This section is able to enforce payment after having confirmed and established the reason for non-repayment. Loanees that then start repayment would then from this point forward liaise with the Call Centre for any account assistance. The Administration section performs the administrative function in the department and ensures that all actions initiated from the Call Centre/Legal are processed i.e.: payments via debit order, sending of statements, logging of written confirmation as per the Procedure Manual. They also manage the mail (post, email or fax) coming in from loanees and update the Loan Management System (LMS). For further information, a detailed procedure manual is available listing the different duties performed and the Call Centre also has agreed Standards against which performance is evaluated.


Finance Unit (Reporting to the CFO)


This unit is responsible for the effective prevention of unauthorised, irregular and fruitless and wasteful expenditure; the rendering of financial planning, budget and cash flow functions; the management of all financial transactions; the management of investments; the management and safeguarding of assets and the management of liabilities within the provisions of the Pubic Finance Management Act; Supply Chain Management; regulatory reporting requirements. The department comprises three sections, namely, Debtors Administration, Accounts Administration, and Financial Compliance, and their functions are as follows:

1. Debtors administration (6 staff members, including a Supervisor – post currently vacant) Responsible for the management of all debtors’ transactions in the Loan Management System: loans, bursaries, credits, income (all sources of repayments), interest, refunds, and irrecoverable debt; ensuring accurate data is available for the production of statements to debtors. They also liaise with the IT unit when required to fulfill organisational objectives. Preparation of reconciliation schedules for external audit.


2. Accounts administration (5 staff members, including a Supervisor - 1 of the 5 posts

currently vacant) Responsible for receipting grants received for student awards, payments to all institutions; monitoring daily balances in operational bank accounts; daily cash flow; reconciliation of all bank, treasury and investment accounts; payments to service providers; maintenance of accounting system; monthly and quarterly reporting; donor reconciliations for inclusion in donor reports; preparation of reconciliation schedules for audit; liaising with IT when required to fulfil organisational objectives.


3. Financial compliance (1 staff member)

Assists the CFO with: statutory reporting requirements as required by the NSFAS Act, the

PFMA and other legislative requirements; materiality frameworks; compliance to supply chain management guidelines; procurement; maintenance of supplier database; maintenance of assets register. A Management Accountant to manage the day to day operations in Finance and a Procurement Officer to manage Supply Chain Management will be recruited shortly.


Human Resources Management Unit (Reporting to the HR Manager)


The Human Resources (HR) function serves as a link between management and employees. Providing specialized services to staff members, the department's goal is to foster positive relationships, to increase job satisfaction within the organizational mandates and resources, and to make sure all customer or client needs are met. Specific responsibilities include: administration, recruitment, company compensation and benefits, training and development, health and safety, and employee relations. The Human Resources Functionaries must be knowledgeable of company goals, relevant laws and union contracts, and needs to be able to recognize and evaluate industry trends. Personnel Management is also a function of management which coordinates the human resource needs of an organization, including the designation of work, employee selection, training and development, rewards, performance assessment and union–management relations. In addition the HRM manages the organizational corporate services which include building and facilities management, security and health and safety, and general administration services.


Research and Policy Unit (Reporting to the Research and Policy Officer)


The Research and Policy Unit is responsible for three critical functions:

a) Providing management information support and information analysis for the organisation, through the interpretation of transactional data and statistical information;


b) Exploring broader issues relating to the impact of the higher education and training sector on student financial aid and undertaking new research into critical areas for development for the organisation; and


c) Contributing to and coordinating business analysis and policy development projects across diversified projects in the organisation.


The Unit is currently staffed by only two staff members, but there is an intention to staff with this unit with an additional junior information analyst.


Internal Audit (Administratively reporting to the CEO and operationally to the Audit Committee of the Board)


The role of NSFAS Internal Audit is, primarily, to provide ongoing independent assurance to the Audit Committee of the Board and Management in respect of the adequacy and effectiveness of the Scheme’s systems of internal control and risk management practices, supporting the achievement of the Scheme’s business objectives.

Increasingly, Internal Audits which are essential, add value to the organisation by assisting the Board Audit Committee and Management in effectively discharging their duties. NSFAS Internal Audit provides such assistance by:


·         Reviewing the adequacy of the system of internal control aimed at managing the risks associated with the business.


·         Reviewing the reliability and integrity of financial and operating information and the means used to identify measure, classify and report information.


·         Appraising the economic and efficient management of financial, human and other resources, and the effective conduct of operations.


·         Reviewing the systems established to ensure compliance with those policies, plans, procedures, laws and regulations that have a significant impact on operations and reports.


·         Appraising the systems of prevention and assisting in the detection and investigation of fraud.


·         Joint planning with external auditors to ensure optimal audit coverage.


·    Reviewing operations or programs to ascertain whether or not results are consistent with established objectives and goals and whether or not the operations are being carried out as planned.


·         Recommending improvements to Policies, Standards and Procedures.


·         Ensuring that the quality of all operations is promoted.


·         Comply with the Standards for the Professional Practice of Internal Auditing as prescribed by the Institute of Internal Auditors.

By virtue of the above, Internal Audit is therefore responsible for the auditing of both NSFAS operations and the operations so delegated to the Higher Education Institutions through the NSFAS Requirements and Guidelines document. Internal Audit currently consists of one person utilisingthe services of an External Audit Company to facilitate the meeting of its objectives and responsibilities.


Report to be considered.




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