Budget hearings: National Student Financial Aid Scheme and South African Qualifications Authority

Meeting report

EDUCATION PORTFOLIO COMMITTEE
15 March 2006
BUDGET HEARINGS: NATIONAL STUDENT FINANCIAL AID SCHEME AND SOUTH AFRICAN QUALIFICATIONS AUTHORITY

Chairperson: Prof S Mayatula (ANC)

Documents handed out:
National Student Financial Aid Scheme Presentation (PowerPoint)
South African Qualifications Authority Presentation to Portfolio Committee on Education (PowerPoint)
Brief Overview of Significant Developments in the Development and Implementation of the South African Qualifications Framework

SUMMARY
Due to a number of misunderstandings the Education Labour Relations Council (ELRC) and Umalusi were unable to brief the Committee on their budgets.

The National Student Financial Aid Scheme (NSFAS) briefed the Committee on its role, focus, strategic goals and gave a budget summary as well as a summary of its loan allocations and recoveries. The Committee sought more clarification on a number of aspects of its loan system including how allocations were decided as well as the methods it used to recover loans. The effect of the new National Credit Act on the work of the NSFAS was also queried. Both the Committee and the NSFAS recognised the importance of encouraging students to be more proactive in applying for NSFAS loans and sending in their applications before tertiary institution deadlines.

The South African Qualifications Authority briefed the Committee on the significant developments of the National Qualifications Framework (NQF) and SAQA’s plans for the upcoming year which included its budget assumptions and medium-term revenue estimates. Committee members requested more information on the NQF Support Link and NQF Community Gateway as well as the Recognition of Prior Learning (RPL). Members were also concerned over the high unemployment rates of graduates that was highlighted by the President, the registration of further education and training (FET) qualifications and also wished to know how the South African NQF compared with the NQF’s of other countries. The Committee felt that the SAQA’s briefing was too broad and had not directly related its budget to its programmes. SAQA promised to forward this more detailed information to the Committee as soon as possible.

MINUTES
Briefing by National Student Financial Aid Scheme
Mr A Taylor (Chief Executive Officer of NSFAS) briefed the Committee on the role of NSFAS which was to provide for the granting if loans and bursaries to eligible students at public higher education institutions and for the administration of such loans and bursaries as well as the recovery of loans. The main focus areas of the NSFAS were also mentioned.

The total value of loans for the 2006 academic year was R1, 315,224,543. As more funds were received the total value of loans would grow by around R50 million. The NSFAS received R926, 378,000 of its budget from the Department. The rest of the amount was made up of NSPAS re-injection of recoveries and interest, partnership and private sector funding, institution funding and other funding. The administration expenditure of the NSFAS was kept to a bare minimum so that 98% of its funds were awarded directly to students.

The maximum loan awarded to students was R32 500 while the minimum was R2 000 in the 2006/2007 financial year. This maximum award was the equivalent of the national average full cost of study for the first time. The rate of the recoveries of loans was projected to increase right up to the year 2009. The university allocations for 2006 were also presented. The University of Tshwane received the highest percentage of allocation while the Rhodes University received the lowest. Funds for teacher education had also been ring fenced by the NSFAS.

The NSFAS had a number of strategic goals it wished to achieve in the future. It also played an important role in advising the Minister on matters relating to student financial aid and there were a number of areas of investigation in this regard. The briefing concluded with some of important areas that needed to be focused on by the NSFAS.

Discussion
The Chairperson requested more information about the new system introduced at tertiary institutions where students were not required to pay registration fees. What implications would this system have?

Mr Taylor replied that students often only completed the loan agreements by the April of the year they began their studies and their loans were then paid out. However, most tertiary institutions required the payment of registration fees at the beginning of the year. This problem had lead to the larger universities waiving NSFAS student’s registration fees.

The NSFAS had also begun giving up front payments to the smaller tertiary institutions and then subtracted these amounts from the loans paid later in the year. The universities usually had a vigorous application system for NSFAS loans. However, this was necessary as students often took chances by trying not to pay their registration fees even though they had the money. The NSFAS had informed the tertiary institutions including the Student Representative Councils at these institutions of its up front payment system. An ongoing problem was poor students not being allowed to register at tertiary institutions due to them not being able to pay outstanding study fees from the previous year. The up front payment system did not solve this problem.

Mr R Ntuli (ANC) congratulated the NSFAS on it unqualified audits. It was good to see that money was actually being spent in the areas it was allocated for. The briefing had highlighted that some students were given loans of up to R32 000. What were the reasons for these larger loans? The amount of money the NSFAS recovered from students depended on these students being employed. He therefore wished to know if the NSFAS had a particular system to ensure the employability of students. What methods did the NSFAS use to recover loans from its students?

Mr Taylor replied the needs of students differed which some of them received full study fees while others only received small amounts. A number of factors played a role in this. For example, the University of Cape Town’s average study fee for a course was R46 000. However, this amount was divided up into tuition fees and meals and accommodation. The cost of courses also differed, for example, a bachelor of arts was less expensive than a medical degree. The study fees of courses also differed from institution to institution. Some students also needed money for accommodation while others did not. All these factors played a role in deciding what amount students received.

Statistics South Africa had recently released a number of graduate unemployment statistics. 17% of graduates between 18 and 24 years were unemployed while 14% of graduates between 25 and 34 years did not have work. The latter statistic was most worrying for the NSFAS as most of its debtors fell in this age group. It was currently working with the Umsobomvu Youth Fund to update its database of graduates and was encouraging its debtors to add their details to this database in order for interested employers to have access to their details.

Proposals had also been made by a number of stakeholders such as the Youth Office of the Presidency to intervene in the graduate unemployment problem through internships and national service. If the unemployment rate improved the NSFAS rate of debt recovery would also. A further problem was those NSFAS students who did not complete their studies. Their unemployment rates were even higher yet they still needed to repay their loans.

Ms M Matsomela (ANC) congratulated on the good work the NSFAS had done. She asked how the NSFAS reached out to the private sector in order to receive funding. It was interesting to learn that one of the NSFAS funders was the Eastern Cape Provincial Government. How had the NSFAS managed to obtain this funding and why was it not receiving funding from other provinces? Most of the NSFAS funding was allocated to the Gauteng province, yet this provincial government was in one of the best positions to provide the funding needed on its own.

Mr Taylor answered that the NSFAS had formed a number of partnerships with various institutions. An example of these partnerships was with the South African Institute for Chartered Accountants, Internal Auditors and Actuaries. These partnerships were solely formed to train more black people in these professions. For example out of 27 000 chartered accountants in South Africa only 500 were black. A number of institutions subject to the Financial Sector Charter were interested in becoming involved with the NSFAS.

With regards to the Eastern Cape, the province had asked the NSFAS to run its three separate funds for poor students on its behalf as it did not have the capacity to do so. Most of the other provinces had been managing these funds by themselves. However, the Western Cape had also recently approached the NSFAS to provide assistance with regards to its bursary funds.

Although most of the funds had been allocated to Gauteng these funds were received by the poorer institutions in this province. Many students at these institutions also came from the poorer provinces such as Limpopo and the North West. It was also important to note that this money was allocated on the basis of need and race played an important part. However, black students also varied in need at the different institutions.

Mr B Mosala (ANC) wished to know more about the NSFAS methods to track students who had to repay their loans. What was the cost of these tracking methods?

Mr Taylor responded that once students were tracked down they were normally quite willing to repay their loans. A number of stakeholders aided the NSFAS in tracking debtors. The NSFAS sent the identity numbers of the debtors it wished to track down to the South African Revenue Service twice a year that then provided the employer details of these debtors not their home addresses. The NSFAS also tracked down government employees by running identity numbers through the Personnel Administration System (PERSAL)system. If debtors were tracked down with this system automatic deductions were made from their salaries.

Students were obliged to forward their change of addresses to the NSFAS. If they did not do so the NSFAS could list their names with the credit bureau. If these debtors applied for credit they would be turned down and told to repay their NSFAS loans. It also used a number of other tracking methods including staff who went through newspapers, checked television programme credits and other databases. This ultimately led to the NSFAS tracking down most of its debtors. It resisted using outside agencies due to many of them using an aggressive approach. Outside agencies were only used when debts were older than ten years, in other words, before 1995. The asking rate of these agencies was between 20% and 25%. This was expensive but the NSFAS had lost hope in recovering this debt, and it therefore was pleased to recover any of these outstanding amounts. Its strategy was to recover 20% of loans older than ten years.

The Chairperson referred to the budget summary given in the briefing. What was the reason for the two different amounts given in the summary namely, R1, 381,844,627 and R1, 346,844,627? What factors played a role when the NSFAS decided on the amounts to be allocated to the various tertiary institutions? Where the differences in allocations tied to the cost of the various study courses or rather the number of NSFAS students enrolled at the institutions?

He also wished to know how many people the NSFAS employed. With regards to strategic goals of the NSFAS, how did it assist students who did not have maths and science to be able to study at tertiary institutions? One of the major problems facing students is the fact they needed to be proactive in order to receive NSFAS loans as they had to apply for this funding. However, many students did not apply by the required deadlines and therefore did not study further. Had the NSFAS employed a strategy to deal with this problem? He felt that the NSFAS needed to put an emphasis on the importance of the principals of the schools in informing students of these funding models. These principals could implement training exercises were students are taught how to complete these application and registration forms.

Lastly, one of the strategic goals of the NFSAS was electronic communication with tertiary institutions. When students applied at a tertiary institution for an NSFAS loan did this tertiary institution select the students who should receive the loans or were these applications sent to the NSFAS who then made the selection? Was this the reason for this need for electronic communication?

Mr Taylor answered that the difference in the above figures was largely due to the method of accounting the NSFAS had applied in the current year. The R1, 346,844,627 amount had not included the R35 million that had been received by other institutions. This was because this money was only really managed by the NSFAS on behalf of these institutions, it was not a loan.

With regards to maths and science, the NSFAS has proposed that all poor students wishing to study maths and science at a tertiary level automatically receive loans if they passed the means test for funding. The NSFAS was even prepared to ring fence an amount for this proposal in the future. Unfortunately, very few needy students seemed studied maths and science at a tertiary level. The Department was also specifically focusing on this problem and a workshop dealing with this issue would be held in the next few weeks which the NFSAS would also attend.

The NSFAS was based in Cape Town and it employed 52 full-time employees. During peak times it also employed up to 13 temporary staff members who helped with data capturing and the tracking of debtors.

The NSFAS had written to all the principals and had included brochures and posters. However, many of these schools had not used this information due to them having a lackadaisical attitude. Often the schools where the results were poor were due to the management structures of these schools being extremely ineffective. He supported the idea of schools practising the filling in of application forms with their students and the NSFAS would try to encourage this in the future.

The allocation of loans was entirely the responsibility of the tertiary institutions. Once this allocation had taken place the details of the chosen students were then sent to the NSFAS. The NSFAS hoped to receive this information electronically in the future so that it could then be automatically stored on computer. It was important to highlight that the NSFAS communicated closely with these tertiary institutions and the students to ensure that the loan allocation system was properly implemented.

The Chairperson wished to know what effects the forthcoming new National Credit Act would have on the work of the NSFAS. The Committee had also requested at its last meeting with the NSFAS that it also send its information to the constituency offices in the various provinces.

Mr Taylor responded that it was currently preparing material which it would send to all schools, constituency offices, provincial governments and non-governmental organisations. It would print nearly one million brochures as it was extremely important that students be encouraged to apply for funding.

The National Credit Act would have no serious implications due to the attorney for the NSFAS managing to make a succinct presentation to the Parliamentary Committee of Trade and Industry. This had led to changes being made to the Bill before it was passed. The Department of Trade and Industry had also promised the NSFAS that it would implement regulations that did not impose restrictions on its work. The NSFAS was not a credit provider in the true sense yet the Act had recognised it as one. The NSFAS was now classified as a developmental credit provider so it did comply with the Act. However, this inclusion would not pose any serious financial implications.

The Chairperson stated that it was clear that funding wasn’t the real issue but rather the fact that students were not applying for these funds nor were sending their applications in on time.

Mr Taylor agreed and said that the days where students could apply in January and February to study in the same year were coming to an end. It was extremely important to get the message across that students had to apply before the application deadlines.

Briefing by South African Qualifications Authority
Mr Joe Samuels gave an overview of the significant developments of the NQF as well as SAQA’s plans for the upcoming year. SAQA’s mission was to ensure the development of the NQF which contributes to the full development of each learner and to the social and economic development of the nation at large. This mission supported the Tirisano Programme of the Department and the Vhutsila programme of the Department of Labour. The NQF had a number of key objectives and SAQA had created a number of structures in order to meet them.

A number of significant developments had occurred in the development and implementation of the NQF. These developments included the benefits seen from building communities of trust especially with the Council on Higher Education (CHE) and Umalusi, the focus on government priorities and scarce skills, the implementation of quality assurance mechanisms, involvement in the education and training of the SADC region and the creation of the NQF Impact Study in 2005. Other important developments were the focus on the unemployment of graduates, the uptake of NQF registered qualifications, the capacity building of the implementers of the new education and training system and lastly, the NQF review.

The Budget Assumptions of SAQA were presented. Funding from government was expected to be at least R34 million. SAQA had also saved R3.2 million from the 2005/2006 budget which would be used to fund the 2006/2007 budget. The medium-term revenue estimate up to 2008/2009 was given and the total revenue estimated for 2006/2007 was R51, 038, 824. The medium term expenditure was also estimated and the surplus and deficits were estimated to be zero up to 2008/2009.

Mr Samuels then presented SAQA’s key strategic plan and core strategy. It had a number of programmes and plans that fell in the areas of and administration and support, national standards setting and development, national quality assurance and development, the National Learners Records Database (NLRD) and the National Centre for the Evaluation of Foreign Qualification (CEEQ).

Discussion
The Chairperson asked if the two PowerPoint slides that dealt with medium-term expenditure estimates were actually one table or whether they were separate tables.

Mr Samuels replied that they were a continuation of one slide.

The Chairperson felt that the figures presented by SAQA did not assist the Committee in determining what the institution had specifically used its money for and how successfully this had been done. These figures were too broad as the Committee had hoped to get specific details on SAQA’s expenditure plans.

Mr Samuels replied that he believed that a summary of this expenditure would be adequate. He would make more detailed information available to the Committee in the next few days.

Mr Ntuli referred to the brief overview document that was presented to the Committee. Point five of the document discussed the National Qualifications Framework Impact Study and made very affirmative and powerful statements. These statements were that the NQF Impact Study was a world first and no other country had attempted to measure the progress of NQF’s in such a comprehensive and empirical manner. These statements implied that comparative studies had been done with other countries. How did the South African NQF compare with other developing countries such as India and Brazil? What were its strengths and weaknesses?

Mr Samuels responded that the South African NQF included both education and training systems. Most other NQF’s only formed part of vocational systems. This meant that the South African NQF was the first in the world to include all these other aspects. A number of other NQF’s have begun the process of measuring the impact of this framework and South Africa was one of them. This process consisted of three phases; firstly, the indicators that would be used to measure the impact were identified. Secondly, a baseline was established and lastly, in the following financial year a comparison between the baseline and the changes that had occurred would be made.

He was happy to send documents that explained this process in detail to the Committee. Countries in the Southern African Development Community (SADC) region had also made progress with regard to NQF’s. Both Botswana and Lesotho had set up a vocational educational qualification framework. They were in the process of setting up NQF’s that included all areas and had introduced the relevant legislation to their Parliaments. Mauritius had already passed this legislation and was in the first phase of implementation. This legislation had already been introduced in 1995 in South Africa and a SAQA board had been set up in 1996. This meant that South Africa had already enjoyed ten years of NQF implementation. Both Brazil and India did not appear to have NQF’s. Countries like Australia and New Zealand had these frameworks but they were much more established. However, when a direct comparison was made with these NQF’s, SAQA still appeared to be more comprehensive.

Mr B Mthembu (ANC) stated that SAQA aimed to compile a report on how many learnerships existed and what the completion rate of these learnerships was. Did SAQA intend to do this in the future or had it started this process. If this process had begun what were the output timeframes for this Report?

Mr Samuels replied that bodies such as the Department of Labour had details on the number of people that were enrolled in various learnerships. However, it was unclear how many of these people actually graduated from these learnerships and became qualified. SAQA was therefore trying to obtain this data through its NLRD so that it could then be processed. SAQA hoped to have a preliminary report on this issue in the next three months which would then still obviously need to be verified. This report would be important as it would enable SAQA to see what trends were emerging with regards to learnership qualifications.

The Chairperson referred to the brief overview document where SAQA supported a number of programmes and qualifications in order to focus on government priorities and scarce skills in terms of qualification and unit standard development. One of the most important areas of interest with regards to this issue was the gap that existed between FET training courses and FET exams. While the training courses consisted of 20% theory and 80% practical, the exams only tested theoretical knowledge. What were SAQA’s timeframes regarding the registering of new FET qualifications as without these new standards these FET colleges’ qualifications weren’t worth the paper they were written on? The briefing had also referred to a joint submission made by SAQA , the CHE and Umalusi to Parliament in the past. Was that submission made to this Committee?

The brief overview document also referred to the problems surrounding the creation of meaningful Memorandums of Understanding between the different provinces and colleges. There seemed to be misunderstandings that prevented the signing of these MoUs. RPL was also referred to in the briefing. He requested that SAQA re-send documents on this issue to the Committee as it was an area which colleges did not really understand and they did not feel that it was their responsibility but it was actually extremely important.

He also wished to know more about the 60 000 unemployed graduates the President had alluded to and the 9 000 unemployed graduates SAQA had verified. One of SAQA’s aims with regards to capacity building was the establishment of an NQF Support Link and an NQF Community Gateway. The Chairperson requested more information on this project as a large amount of funds was set aside for recapitalisation and he wished to understand the link between this project and capacity building.

Mr Samuels answered that SAQA was working closely with the Department and was supporting it in its registration of FET vocational qualifications. This registration would hopefully occur by June. The implementation of the Curriculum Act of the FET Colleges would be the responsibility of the Department. This registration would enable people to identify what standards needed to be met in order to receive their proper qualifications.

SAQA, the CHE and Umalusi had made a joint submission to this Committee in the past and were also working together on a way forward. However, SAQA then heard that a proposal was going to be made to cabinet so that many of the problems that had existed could be resolved. However, this proposal was never made and SAQA, the CHE and Umalusi therefore needed to readdress this problem. With regards to the MoUs, a number of problems existed around the FET colleges, the provinces, the ETQA, SETA and Umalusi. SAQA needed to identify the reasons for these problems and then had to bring all these parties together so that an MoU could be signed. An important factor that would play a role in these negotiations was a community of trust. A great deal of mistrust existed amongst these parties and it needed to be overcome. Documents on RPL would be forwarded to the Committee as soon as possible.

SAQA had registered a number of standards for the NQF Support Link and this meant that people who had completed this programme would be awarded in some way. This Support Link dealt with how the capacity of the leadership in FET colleges could be developed in order for this it to understand what NQF and RPL was entailed. 250 people from FET colleges had already completed this programme. This programme could be accessed via the Community Gateway website, through CD-ROMs and printed copies. Both these structures supported the FET recapitalisation process as it helped build the capacity of leaders to understand the NQF and also to supported government programmes.

The President had stated that he had a database of 60 000 unemployed graduates in South Africa. SAQA had obtained a section of this data from the Umsobomvu Youth Fund in order to verify this information and it only found 9 000 matches. SAQA aimed to analyse this data in greater detail in order to identify which institutions these graduates had graduated from and in which areas they had studied in. It would then give feedback on this information to the Council of Higher Education so that a reason for unemployment could be identified. Was it for instance the economy or was it the lack of quality qualifications causing this unemployment.

The Chairperson asked what the size of the section was out of the 60 000 that SAQA had verified. He also wished to know why SAQA had R3.2 million in savings from the 2005/2006 budget. Lastly, he asked if the NQF Support Link and Community Gateway was a website as this was not made very clear in the briefing.

Mr Samuels replied that it verified that 9 000 graduates were unemployed out of a total of 22 000 graduates that was sent to SAQA for verification. The reason for the R3.2 million savings was because SAQA had formed a number of joint implementation partnerships with other stakeholders in the previous financial year. These joint agreements had meant that funds that had been set aside for certain projects had not fully been used. The NFQ Support Link and Community Gateway was a website. The Committee could access this website by visiting www.saqa.org.za and then following the links provided.

Mr Mosala stated that he had a number of questions regarding the training of security company officers as well as the falling of standards at agriculture colleges. However, he would frame these questions properly and pose them to SAQA at a later stage.

The Chairperson concluded that the briefing had not really related SAQA’s budget to it programmes. This was the information the Committee had hoped to obtain from the briefing.

Mr Samuels promised to send the documents containing this information to the Committee in the next few days.

The meeting was adjourned.