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BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

Learn about the National Student Financial Aid Scheme (NSFAS) and its mission to provide a sustainable financial aid system for academically gifted yet economically disadvantaged students in South Africa. Established in 1991, NSFAS has evolved to support students through income-contingent loans and bursaries, with a focus on efficiency and accountability. Explore the organization's structure, operational modes, award values, success rates, and strategies for future development. Discover how NSFAS keeps costs low and maintains good governance through internal audits, committees, and collaborations. Join the effort to ensure equitable access to education and boost national development in South Africa.

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BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

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  1. BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

  2. THE NSFAS MISSION BUILDING A SUSTAINABLE FINANCIAL AID SCHEME 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.

  3. BACKGROUND BUILDING A SUSTAINABLE FINANCIAL AID SCHEME 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.

  4. NATIONAL STRUCTURE 41 Financial Aid Offices at 29 tertiary institutions

  5. TYPE OF SCHEME … in a nutshell BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • 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 ofthe conversion is determined by the student’s academic results.

  6. MODES OF OPERATION … in a nutshell BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • 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.

  7. MODES OF OPERATION … in a nutshell BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • 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;

  8. MODES OF OPERATION … in a nutshell BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • 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.

  9. MODES OF OPERATION … in a nutshell BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • 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.

  10. BUILDING A SUSTAINABLE FINANCIAL AID SCHEME AWARD VALUE 1991 - 2004

  11. YEAR TOTAL • 1991 7 240 • 1992 14 161 • 1993 20 811 • 1994 28 260 • 1995 43 876 • 1996 72 788 • 1997 70 574 • 1998 75 764 • 1999 75 346 • 2000 82 069 • 2001 93 532 • 2002 99 949 • 2003 110 000 (est) BUILDING A SUSTAINABLE FINANCIAL AID SCHEME AWARDS GRANTED 1991 - 2003

  12. BUILDING A SUSTAINABLE FINANCIAL AID SCHEME AVERAGE AWARD SIZE : 1991 - 2003

  13. TOTAL AWARDS BUILDING A SUSTAINABLE FINANCIAL AID SCHEME A total of 769 975 awardsto 346 297 students

  14. 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% • 72.5% • 73.1%

  15. REINJECTION OF RECOVERED MONEY BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • R 18 million • R 24 million • R175 million • R150 million • R211 million • R223 million

  16. HOW ARE COSTS KEPT LOW? BUILDING A SUSTAINABLE FINANCIAL AID SCHEME Financial efficiencyis the key to the overall design of the NSFAS modes of operation The administrative cost is approximately 1.8% of total expenditure

  17. HOW ARE COSTS KEPT S0 LOW? BUILDING A SUSTAINABLE FINANCIAL AID SCHEME NSFAS is systems intensive rather than labour intensive

  18. CORPORATE GOVERNANCE BUILDING A SUSTAINABLE FINANCIAL AID SCHEME Internal Audit NSFASManagement Audit Committee

  19. CORPORATE GOVERNANCE cont. BUILDING A SUSTAINABLE FINANCIAL AID SCHEME Finance Committee NSFAS Board

  20. CORPORATE GOVERNANCE cont. BUILDING A SUSTAINABLE FINANCIAL AID SCHEME Minister of Education National Treasury

  21. Areas for Future Development BUILDING A SUSTAINABLE FINANCIAL AID SCHEME • Closer collaboration with SARS • Development of Bursary administration section • Improved electronic communication with HEIs

  22. 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

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