department of higher education and training
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17 March 2010 1
Department of Higher Education and Training
PRESENTATION OF REVIEW COMMITTEE REPORT:
NATIONAL STUDENT FINANCIAL AID SCHEME
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?
March 2010 2
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
March 2010 3
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
March 2010 4
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
March 2010 5
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%
March 2010 6
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’
March 2010 7
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.
March 2010 8
ALLOCATION FORMULA (1)A Sample of HEIs
HEI Average NSFAS Award
FCS Ratio
UCT 21 369,59 54 610 2,6
UFH 10 858,60 32 340 3,0
UP 22 657,28 47 645 2,1
UL (P’KWANE) 16 935,42 41 069 2,4
WSU (B’WORTH)
6 615,92 25 983 3,9
March 2010 9
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
March 2010 10
FREE UNDERGRADUATE EDUCATION FOR THE POOR: PROJECTIONS VARYING PARTICIPATION (CURRENT VALUES)
Participation Rate (% age
group)
% of poor or working class
students
Estimated cost in 2010 (R,bn)
Estimated cost in 2020 (R,bn)
17 14 5,2 5,6
25 9,2 10,0
40 14,8 16,0
20 14 5,3 6,6
25 9,5 11,7
40 15,2 18,7
24 14 5,5 7,9
25 9,8 14,2
40 15,7 22,7
March 2010 12
FULL STATE SUBSIDY FOR FET COLLEGES (NCV)
Enrolment Rate (%age group)
2,4% 10% 20% 40%
Students (NCV) 124 530 141 660 150 874 160 687
Cost R4,234b R4,816
Assumptions
All students receive full subsidy/free education.
Average full cost of study: R34 000 per annum.
Costing in 2009 prices.
Enrolment Rate (% age group)
2,4% 10% 20% 40%
Students (NCV) 130 662 539 332 1 078 665 2 157 330
Cost R4,443b R18,337
2010 SCENARIO
2020 SCENARIO
March 2010 13
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
March 2010 14
Strengthening of financial aid offices Development of loan administration and
bursary administration competencies FET bursary award system to be reviewed
to eliminate inefficiencies
March 2010 SECRET 15
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
March 2010 17
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
March 2010 18
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
March 2010 20
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)
March 2010 21
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
March 2010 22
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