BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

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BUILDING A SUSTAINABLE FINANCIAL AID SCHEME
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THE NSFAS MISSION
NSFAS seeks to impact on South Africas
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 Africas development needs.
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BACKGROUND
1991 The Tertiary Education Fund of South
Africa (TEFSA) formed.
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.
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NATIONAL STRUCTURE
41 Financial Aid Offices
at 29 tertiary institutions
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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 students academic results.
  

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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.

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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

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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.

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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.

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AWARD VALUE 1991 - 2004
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AWARDS GRANTED 1991 - 2003
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AVERAGE AWARD SIZE 1991 - 2003
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TOTAL AWARDS
A total of 769 975 awards to 346 297
students
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SUCCESS RATES

• Courses passed
• 1996 72.6
• 1997 75.3
• 1998 76.1
• 1999 74.1
• 2000 75.2
• 72.5
• 73.1

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REINJECTION OF RECOVERED MONEY

• R 18 million
• R 24 million
• R175 million
• R150 million
• R211 million
• R223 million

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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
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HOW ARE COSTS KEPT S0 LOW?
NSFAS is systems intensive rather than labour
intensive
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CORPORATE GOVERNANCE
Internal Audit
NSFAS Management
Audit Committee
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CORPORATE GOVERNANCE cont.
Finance Committee
NSFAS Board
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CORPORATE GOVERNANCE cont.
Minister of Education
National Treasury
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Areas for Future Development

• Closer collaboration with SARS
• Development of Bursary administration section
• Improved electronic communication with HEIs

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Areas for Future Development continued

• 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