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BUILDING A SUSTAINABLE FINANCIAL AID SCHEME

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

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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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