BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

THE NSFAS MISSION

NSFAS seeks to impact on South Africa’s historically skewed student, diplomate

and graduate populations … by providing a sustainable financial aid

system which enables poor but academically able students to meet their

own and South Africa’s development needs.

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

1991 : The Tertiary Education Fund of South Africa (TEFSA) formed.

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

BACKGROUND

1995 : TEFSA asked to administer the National Student Financial Aid Scheme.

1999 : The National Student Financial Aid Scheme Act of 1999 passed by parliament.

2000: TEFSA becomes NSFAS.

NATIONAL STRUCTURE

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

TYPE OF SCHEME … in a nutshell

NSFAS is an income contingent loan and bursary scheme.

The initial award is a 100% loan. For 2004 there is a minimum of R2 000 and a maximum of R25 000

Interest accrues on loans at approximately 2% real rate of interest. For 2004 the interest rate is 7%

up to 40% of the loan is converted into a bursary … where the extent of the conversion is determined by the student’s academic results.

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

MODES OF OPERATION … in a nutshell

NSFAS allocates funding to institutions.

The Allocation formula is informed by the number of students, general need of students and cost of

study at the respective institutions.

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

MODES OF OPERATION … in a nutshell Financial Aid Offices:

invite application;

NSFAS Means Test and assess academic potential of applicants … (money goes to the poorest most

academically able students);

determine the size of the award;

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

MODES OF OPERATION … in a nutshell Financial Aid Offices:

ensure that the loan agreement forms are completed correctly;

send batches of forms with interim reports to NSFAS claiming money on behalf of the students.

NSFAS processes the claims and makes payment.

Financial Aid Offices credit student fee accounts.

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

MODES OF OPERATION … in a nutshell

All students receive statements 4 times a year.

Loans are income contingent and recoverable at salary source once a loanee is employed.

NSFAS tracks debtors to their places of employment via the South African Revenue Services.

Recovered money is re-injected into the Scheme.

AWARD VALUE 1991 - 2004

R 0

R 100

R 200

R 300

R 400

R 500

R 600

R 700

R 800

R 900

(MIL

LIO

N)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

AWARDS GRANTED 1991 - 2003

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

YEAR TOTAL1991 7 2401992 14 1611993 20 8111994 28 2601995 43 8761996 72 7881997 70 5741998 75 7641999 75 3462000 82 0692001 93 5322002 99 9492003 110 000 (est)

AVERAGE AWARD SIZE : 1991 - 2003

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

R 0

R 1,000

R 2,000

R 3,000

R 4,000

R 5,000

R 6,000

R 7,000

R 8,000

R 9,000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

TOTAL AWARDS

A total of

769 975 awards

to 346 297 students

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

SUCCESS RATES

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

Courses passed:

1996 72.6%1997 75.3%1998 76.1%1999 74.1%2000 75.2%2001 72.5%2002 73.1%

REINJECTION OF RECOVERED MONEY

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

1999 R 18 million

2000 R 24 million

2001 R175 million

2002 R150 million

2003 R211 million

2004 R223 million

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

HOW ARE COSTS KEPT LOW?

Financial efficiencyis the key

to the overall design of the NSFAS modes of operation

The administrative cost is approximately 1.8% of total

expenditure

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

HOW ARE COSTS KEPT S0 LOW?

NSFAS issystems intensive

rather than labour intensive

CORPORATE GOVERNANCE

Internal Audit

NSFAS Management

Audit Committee

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

CORPORATE GOVERNANCE cont.

Finance Committee

NSFAS Board

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

CORPORATE GOVERNANCE cont.

Minister of Education

National Treasury

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

Areas for Future Development

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

•Closer collaboration with SARS

•Development of Bursary administration section

•Improved electronic communication with HEIs

Areas for Future Development … continued

BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

•Explore options to provide incentives for study in scarce skills areas

•Ensure better compliance with NSFAS requirements at institutional level

•Obtain financial support from South African private sector