Portfolio Committee on Education National Assembly PRESENTATION TO Portfolio Committee on Education National Assembly ----------------------- 25 March 2008 By Mr. Pragasen Naicker NSFAS CEO

NATIONAL STUDENT FINANCIAL AID SCHEME NSFAS was established in 1999 as a public entity, under the Ministry of Education, by an act of Parliament (Act 56 of 1999) to provide for the granting of loans and bursaries to eligible students at public higher education institutions and for the administration of such loans and bursaries; and to provide for the recovery of loans. The NSFAS Act has since been amended to include further education and training (FET) colleges. Amendment gazetted in December 2007.

Building a Sustainable Financial Aid Scheme MAIN FOCUS OF NSFAS The main focus of NSFAS as contained in the preamble to the NSFAS Act is: to redress past discrimination and ensure representivity and equal access; to respond to the human resource development needs of the nation; and to establish an expanded national student financial aid scheme that is affordable and sustainable.

Building a Sustainable Financial Aid Scheme STRATEGIC GOALS Goal 1: To provide access to public higher and further education for marginalised South African citizens who are academically able, in support of the country’s HRD strategy, while making a contribution to the alleviation of poverty. Goal 2: To raise sufficient funding to enable NSFAS to realise its strategic goals.

Building a Sustainable Financial Aid Scheme STRATEGIC GOALS Goal 3: To develop a new allocations formula in line with higher education needs and transformation imperatives, for the equitable distribution of funds through allocating funding in an optimum manner. Goal 4: To communicate NSFAS effectively to all its audiences, seeking to make NSFAS a funding channel of choice. Goal 5: To ensure the effective governance, management and administration of NSFAS.

Building a Sustainable Financial Aid Scheme STRATEGIC GOALS Goal 6: To provide effective and efficient Human Resource management and administration to ensure staff are competent to execute and support the NSFAS Strategy, and are managed in accordance with best current practices. GOAL 7: To implement e-business strategies to enhance collaboration with higher education institutions, thereby increasing the efficiency of the Scheme.

EXPENDITURE SUMMARY Building a Sustainable Financial Aid Scheme 2007/08 expenditure not updated Delete slide? Building a Sustainable Financial Aid Scheme

CORE ALLOCATIONS 2008 (DE & DE (Teacher)) Eastern Cape R 181.5 m 12% Free State R 92.5 m 6% Gauteng R 600.0 m 39% KwaZulu Natal R 301.0 m 20% Limpopo R 110.0 m 7% Mpumalanga R 0.0 m 0% Northern Cape R 0.0 m 0% North West R 54.0 m 4% Western Cape R 194.0 m 13% Total R 1 532 m Percentage breakdown for 2007 and 2008 exactly the same No public HEIs in Mpumalanga and Northern Cape Adding Funza Lushaka does not change percentage spread materially Building a Sustainable Financial Aid Scheme

KEY PARAMETERS Core Award Scheme Building a Sustainable Financial Aid Scheme KEY PARAMETERS Core Award Scheme Interest rate to be linked to Repo Rate as determined by the South African Reserve Bank and pegged at 80% of Repo. Updated! 18/03/2008

EXPANDING THE SCHEME Bursaries available from 2007: 2007 2008 2009 2007 2008 2009 Funza Lushaka R120m R180m R400m (Teachers) FET colleges R100m R200m R300m Social Work R 50m R105m R210m UPDATED – included info on FET bursaries Building a Sustainable Financial Aid Scheme

EXPANDING THE SCHEME … Public FET Colleges The National Certificate (Vocational) is a new qualification at level 2, 3 and 4 of the NQF. The programmes include: Civil Engineering and Building Construction Electrical Infrastructure Construction Engineering and Related Design Finance, Economics and Accounting Hospitality Information Technology and Computer Science Management Marketing Office Administration Primary Agriculture Tourism These new programmes are intended to directly respond to the priority skills demands of the South African economy. UPDATED – included info on FET bursaries Building a Sustainable Financial Aid Scheme

FET R100 million allocated in 2007 Eastern Cape R 15.5m 16% Free State R 7.5m 8% Gauteng R 18.5m 19% KwaZulu Natal R 18.5m 19% Limpopo R 15.0m 15% Mpumalanga R 7.0m 7% Northern Cape R 3.0m 3% North West R 5.5m 6% Western Cape R 9.5m 10% Total R100 m Of 2007 R100 million, R67 million utilised as at 13 March 2008 allocations not yet available; should be in the same proportion as 2007 Building a Sustainable Financial Aid Scheme

EXPANDING THE SCHEME … Public FET College Bursaries 50 public FET colleges located in the 9 provinces To date, of the R100m available for 2007: R67 million has been paid to FET colleges To assist 12,400 students (average bursary R5,400) UPDATED – included info on FET bursaries Building a Sustainable Financial Aid Scheme

RESULTS Building a Sustainable Financial Aid Scheme * Final processing for 2007/08 year still in progress Updated! 18/03/2008

RECOVERIES Building a Sustainable Financial Aid Scheme

REINJECTION OF RECOVERED MONEY 2000 R24 million 2001 R175 million 2002 R150 million 2003 R211 million 2004 R263 million 2005 R280 million 2006 R305 million 2007 R341 million 2008 R392 million 2008 PROJECTION? R392 million Building a Sustainable Financial Aid Scheme

RECOVERIES Year on year comparison Building a Sustainable Financial Aid Scheme RECOVERIES Year on year comparison Updated! 18/03/2008 NSFAS continues to implement improved loan recovery strategies resulting in improved collections

2007/08 R39 million 2008/09 R48 million ADMINISTRATION Costs Building a Sustainable Financial Aid Scheme ADMINISTRATION Costs 2007/08 R39 million (Total loans and bursaries R1.8 billion) 2008/09 R48 million (Total loans and bursaries R2.1 billion) Currently, the NSFAS cost ratio is slightly less than 2% of the total amount of funds it administers. In national and global terms this is regarded as a low cost operation. The operational costs of Financial Aid offices at each university is the responsibility of the institution. Department of Education contributes to administration expenditure; balance from interest on NSFAS recoveries. Example: 2007 DE R17.6 million, NSFAS RR21.7 million;

Business Process Reengineering (started Feb 08) AREAS OF FOCUS for 2008 Improve operational efficiency and systems at NSFAS to manage any increase in donor funding. Business Process Reengineering (started Feb 08) Further integration of Financial Information Systems (started Feb 08) NSFAS Web based Services (Pilot starts in June 08) Electronic Application and Means Test Form Application for exemption from National Credit Act Building a Sustainable Financial Aid Scheme

Communications and Development including fundraising AREAS OF FOCUS for 2008 Communications and Development including fundraising Current NGO partnerships: Eastern Cape 10 Mpumalanga 1 Free State 0 Northern Cape 0 Gauteng 1 North West 0 KwaZulu Natal 5 Western Cape 2 Limpopo 4 Focus on under serviced areas particularly rural areas Participation in university open days and country wide career exhibitions remains important NSFAS will seek to actively increase its partnerships with Corporate SA Building a Sustainable Financial Aid Scheme

Primary Aim for 2008 Given the importance of the NSFAS mandate in respect of South Africa’s national development goals, the organisation must be able to administer substantial increases in funding when the need arises. In 2008, NSFAS will make fundamental changes and improvements to its systems, processes and staffing capabilities so that it can administer increased funding speedily, efficiently and with the required level of auditing controls. NSFAS will report to the next Portfolio Committee meeting on the outcome of the project referred to above. Building a Sustainable Financial Aid Scheme