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
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 Offices in Wynberg,
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 C Kloppers-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 A Mphunga
(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
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 (
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
|
Institution |
Allocation (R) |
||
|
2006 |
2007 |
2008 Utilised % |
|
|
|
140 930 000 |
167 107 738 |
190 719 374 183
908 955 94 |
|
|
98 782 000 |
118 170 000 |
136 347 816 135
668 223 99 |
|
|
96 158 000 |
108 221 000 |
123 619 257 123
520 378 100 |
|
|
76 711 000 |
89 976 000 |
106 654 490 92 727
376 87 |
|
|
58 693 000 |
69 003 000 |
80 027 357 79
273 462 99 |
|
|
56 357 000 |
65 001 000 |
78 140 354 73
957 141 94 |
|
|
54 482 080 |
64 740 570 |
72 894 000 68
508 066 94 |
|
Medunsa |
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 |
53 128 000 |
58 237 000 |
66 977 000 66
887 917 100 |
|
|
36 615 799 |
46 102 170 |
66 181 956 60
649 982 92 |
|
|
44 794 944 |
52 897 000 |
62 480 250 59
861 020 95 |
|
|
46 479 000 |
50 921 000 |
59 652 391 59
238 200 99 |
|
University of the |
39 446 000 |
45 364 000 |
55 063 374 52
662 993 96 |
|
|
36 253 000 |
58 237 000 |
53 755 911 53
642 456 100 |
|
|
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 |
|
|
38 250 000 |
41 520 143 |
48 781 291 48
490 395 100 |
|
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 |
|
|
38 250 000 |
43 059 000 |
49 170 961 48
792 261 99 |
|
Mthatha 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 |
|
|
21 630 000 |
24 513 000 |
31 792 532 29
053 880 91 |
|
|
10 407 000 |
14 763 882 |
14 940 946 14
887 714 100 |
|
|
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
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.
6.2. It 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
·
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
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
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 utilising the services of an External Audit
Company to facilitate the meeting of its objectives and responsibilities.
Report to be
considered.