Department of Higher Education and Training

1. Department of Higher Education and Training PRESENTATION OF REVIEW COMMITTEE REPORT: NATIONAL STUDENT FINANCIAL AID SCHEME

2. STRUCTURE OF PRESENTATION • Why was there a review of NSFAS? • Key findings of the review • What are the key recommendations? • What are the challenges? • How are we dealing with this?

3. Why a review of NSFAS? • Administrative capacity had not kept pace with growth in size of fund (a 10-fold increase in NSFAS budget between 1999 and 2010) • Concerns regarding growing number of blacklisted borrowers • Need to assess short, medium and long term growth requirements of fund to increase access, particularly of poor students • Need to review distribution/ allocation policies and mechanisms

4. Process ahead • Executive Summary was presented to Cabinet on 24 February 2010 • Release report for public comment 16 March 2010 • Urgent work on key areas simultaneously undertaken • Call for comment and public participation process • Responses and bring recommendations to Cabinet by end of August

5. Current Situation: Key facts • 17% of HE Students receive NSFAS funds– unevenly distributed across HEI • Allocations to HEI on the basis of ratio of disadvantaged students • The upper limit of family income in order to qualify for NSFAS is R122 000 pa • Not all universities allocate funds sufficient to cover the full cost of study • Student debt at HEIs is in excess of R2b, in addition to the loan book of NSFAS

6. There are 256 258 borrowers on NSFAS books of which 153 596 are still studying • In 2009, 217 470 (33%) NSFAS students were still registered students; 125 210 (125 510) had graduated; 316 320 (48%) had dropped out without completing their studies , • Loan recovery rate 20 – 26%

7. Key findings: Allocations • The amount of NSFAS funding available falls far short of demand • There are significant gaps between the NSFAS award and the full cost of study for many students – underfunding contributes to drop-outs • There are many families who cannot afford HE but whose income is above the threshold of R122 000 – the ‘missing middle’

8. Key findings: Allocations • The disadvantaged student index used to allocate funds to institutions focuses on race to the exclusion of class - although individual awards are based on class.

9. ALLOCATION FORMULA (1)A Sample of HEIs

10. Key Findings: Loan practices • NSFAS Act gives extra-judicial garnishee power (8 344 borrowers affected) • Predecessor (prior to NSFAS) loans have mostly prescribed and are legally unenforceable, but remain on loan book • The loan book is currently 350% of the value of the combined original loan • The loan book is being reviewed in terms of the national credit Act, and its value will be significantly reduced

11. Key findings: Expanding access

12. FREE UNDERGRADUATE EDUCATION FOR THE POOR: PROJECTIONS VARYING PARTICIPATION (CURRENT VALUES)

13. FULL STATE SUBSIDY FOR FET COLLEGES (NCV) 2010 SCENARIO 2020 SCENARIO

14. Key findings: Administration and Governance • There is a need for strong governance • A capacity and skills audit is required to determine the capacity of the current organisation and how it can be strengthened • Loan administration at institutional level is weak

15. Strengthening of financial aid offices • Development of loan administration and bursary administration competencies • FET bursary award system to be reviewed to eliminate inefficiencies SECRET

16. KEY RECOMMENDATIONS

17. Key Recommendation: Expanding Access • A comprehensive policy framework should be developed to articulate the details of the national policy imperative of providing free higher and further education progressively with a focus on the poor

18. KEY RECOMMENDATIONS: ALLOCATIONS • Institutional allocation formula: from race based to class based • All institutions should receive the average full cost of study per student, regardless of the institutionally determined cost of study • Changes to the student allocation of loans: all students qualifying for NSFAS to get the full cost of study

19. KEY RECOMMENDATIONS: LOAN BOOK • Compliance with the National Credit Act

20. IMMEDIATE ACTION (1) • Loan Book • Requested for an audit of the R 10 billion loan book within this financial year • Legal opinion being solicited in relation to NSFAS compliance with the Constitution and the National Credit Act • Loan recovery mechanisms to be immediately compliant with the legislation and model of interest calculation and payment triggers to be identified • Technical task team to review the cost implications of incremental roll-out of fully subsidised undergraduate education for the financially needy • Working group to assess the feasibility of increasing FET 80% bursary to 100% in line with DHET's goal of increasing access in college sector

21. IMMEDIATE ACTION (2) • Administration and Governance • HR expert from DHET advising on internal restructuring and policies of NSFAS • Close monitoring of progress of Governance review commissioned by NSFAS • Minister to consider appointment of a turn-around team to improve administration in line with recommendations (CEO has now been appointed)

22. WORK UNDERWAY DURING PUBLIC COMMENT PERIOD • Simplify means test and uniformly apply at all institutions • Review of funding of higher education and the link to the rising cost of study at institutions • Commission research into inter-relationship of affordability, access and success • Task team to review possibility of loan recovery by SARS • Solution for the 'missing middle' - children of public servants earning between R 122 000 and R 300 000 and are members of the GEPF – task team to work with the PIC in pursuing this option  

23. Thank You