National Student Financial Aid Scheme. Presentation to the Select Committee on Education and Recreation. 27 August 2014

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1 National Student Financial Aid Scheme Presentation to the Select Committee on Education and Recreation 27 August 2014

2 Presentation Overview Introduction NSFAS mandate and background Student-centred model 2014 loans and bursaries Allocation vs demand 2

3 About NSFAS The National Student Financial Aid Scheme (NSFAS) is a public entity reporting to the Department of Higher Education and Training, governed by the NSFAS Act (56 of 1999). Since inception, NSFAS has disbursed more than R 41,5 billion in loans and bursaries to 1,4 million students In 2013, NSFAS disbursed R8,7 billion to students at the 23 public universities and 50 public Technical and Vocational Education and Training (TVET) colleges throughout the country In 2012, NSFAS disbursed R7,7billion to students 3

4 NSFAS mandate In terms of the NSFAS Act, the organisation s mandate is to: develop criteria and conditions for the granting of loans and bursaries to eligible students in consultation with the Minister raise funds allocate funds for loans and bursaries to eligible students recover loans maintain and analyse a database and undertake research for the better utilisation of financial resources advise the Minister on matters relating to student financial aid perform other functions assigned to it by the NSFAS Act (56 of 1999) or by the Minister 4

5 NSFAS Transformation Programme background NSFAS funding has increased significantly since the NSFAS Act passed in 1999 Growth from R441 million in 1999 to R8,7 billion in 2013 Financial aid to university and TVET college students has increased substantially in the past 5 years: From R3,1 billion for students in 2009 to R8,7 billion for students in 2013 NSFAS structures, policies and systems have not kept pace with growth in funds The Loan Management System developed for TEFSA was outdated and not fit for purpose Contributed to the Auditor-General s Disclaimer of Opinion in 2010 The institution-centric system uses an Allocations Formula based on the Full Cost of Study and race to determine financial need, which skews allocations in favour of historically advantaged institutions. 5

6 Background (Continued) Applications through Financial Aid Offices are not controlled by NSFAS the process developed over time and is deeply flawed requires ad hoc adjustments such as 30% upfront payments students stand for days in queues to apply and get feedback funding is for one year at a time student apply every year for continued funding Fraud and corruption e.g. fraudulent affidavits to support applications Inefficiencies Over, under and late claiming Inadequate documentation Contravention of allowances and terms and conditions NSFAS has never had a direct relationship with students until they have exited Makes it difficult to recover loans and replenish the pool of funds Old systems do not manage information or facilitate reporting Despite the growth in funds, supply still falls far short of demand Institutions disregard the Means Test results and topslice loans This achieves access but hinders success 6

7 Student-centred model In the new student-centred model: Funding is provided for a qualification, not one year of study at a time Students apply once, in the first year of their studies The financial means test is automated and linked to other government databases to verify personal, family, income and employment data Tuition and residence fees are paid to the university or college Allowances for books, food, private accommodation, transport, electronic and assistive devices are paid directly to students, ensuring that spending can be monitored and accounted for 7

8 The new student-centred NSFAS model 8

9 IT model - scope of the new systems 9

10 2014 Loans and Bursaries 10

11 Pilot Universities 2014 loans and bursaries University Allocation R Utilisation R * Students assisted DURBAN UNIVERSITY OF TECHNOLOGY NELSON MANDELA METROPOLITAN UNIVERSITY SOL PLAATJE UNIVERSITY UNIVERSITY OF MPUMALANGA UNIVERSITY OF SOUTH AFRICA UNIVERSITY OF VENDA TOTAL * At 26 August

12 Pilot TVET Colleges 2014 bursaries TVET College Allocation Utilisation as at 26 August 2014 Students assisted EKURHULENI EAST KING HINTSA MOTHEO FET SOUTH CAPE UMFOLOZI TOTAL

13 2014 Allocation and payments Institution Allocation Payments Students Cape Peninsula, University of Technology Cape Town, University of Central University of Technology Fort Hare, University of Free State, University of Johannesburg, University of KwaZulu Natal, University of Limpopo, University of Mangosuthu, University of Technology National Institute for Higher Education - Northern Cape North West University

14 2014 Allocations and payments (Continued) Institution Allocation Payments Students Pretoria, University of Rhodes University Stellenbosch University Tshwane University of Technology Vaal University of Technology Western Cape, University of the Witwatersrand, University of the Walter Sisulu University Zululand, University of Total

15 Pilot first semester findings No paper LAFs and SOPs - The new model has distributed R 1,2 billion in loans and bursaries to students at 11 universities and colleges Visibility of spend - R 398 million has been disbursed, including R130 million on student allowances Speed of processing: 81% students received their food, transport, accommodation and book allowances within 7 days New systems - Phoenix, Cordys, OpenText and Accpac implemented New processes - for applications, admission of returning students, funder-selected admissions, debtor servicing and disbursements implemented 15

16 Pilot first semester findings Student-centred model has high dependency on accurate student and institutional data. This has been a serious challenge for most universities and colleges in the pilot phase. Alignment of dates where data or action is required needs to be reworked, particularly for funder-selected bursary students Adjust process for colleges to facilitate walk-ins and late registrations as few students apply before registration period. 16

17 Rollout Readiness For the student-centred model to be rolled out, the following prerequisites need to be in place: Full operational capacity within NSFAS NSFAS representatives at institutions Institutions to have: Required skills Assurance of data quality Integration to institution s systems System enhancements Relevant policies to be in place 17

18 Allocations vs demand NSFAS plans to meet the increased demand from the number of students enrolled at universities and colleges in the following ways: More efficient use of the allocated funds, including ensuring that funds reach the intended beneficiaries and are spent on intended categories of allowances books, travel, food and accommodation Improving collections of student loans to replenish the pool of funds available Increasing funding from government Fundraising from private sector funders now that reliable, appropriate systems to manage and account for funds are in place. 18

19 Questions and discussion The doors of learning and culture shall be opened! Freedom Charter, 1955 White Paper on Post school Education and Training,

SCHOLARSHIP APPLICATION FORM

2017 APPLICATION FORM CLOSING DATE 31 JULY 2017 Master s reference number IT1674/2005 SCHOLARSHIP APPLICATION FORM The Old Mutual Education Trust provides scholarships for higher education to members and