The changes to NSFAS's funding system were in part prompted by the Fees Must Fall movement. The system has been piloted over the past three years at 11 universities and colleges. Picture: Nokuthula Mbatha
The changes to NSFAS's funding system were in part prompted by the Fees Must Fall movement. The system has been piloted over the past three years at 11 universities and colleges. Picture: Nokuthula Mbatha

New NSFAS funding model to go live

By Louise Flanagan Time of article published Jul 18, 2016

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Johannesburg - Next year’s students should be able to apply for a loan online and use cellphone-generated vouchers to pay for books and food.

The National Student Financial Aid Scheme (NSFAS) has re-engineered the system so the new centralised online application process is expected to start on August 1.

“We’re confident to go live,” said NSFAS national spokesman Kagisho Mamabolo. “It’s the student-centred model. The money follows the students.”

Previously, students applied to their tertiary institutions of choice and those institutions then helped arrange the NSFAS funding for the students. Now the students first apply for funding approval to NSFAS through the new centralised system, list their “wishlist” of institutions where they hope to study, then take that financial approval to the institutions to apply for a place.

The system has been piloted over the past three years at 11 universities and colleges and is now ready to go national.

NSFAS tested the system over the weekend, aiming to avoid a crash as happened with the Gauteng Department of Education’s school applications system recently.

Applications are online and users should be able to apply using either a computer or a smartphone.

To simplify the process, the NSFAS system is linked to other government systems such as Sars, Home Affairs and the social pensions systems. This means that when an applicant enters a parent or guardian’s ID number, the system can check for pension beneficiaries and tax records; this is aimed at confirming claims of financial need.

“There’s a whole synchronisation that takes place,” said Mamabolo.

The system has high schools loaded, so applicants who went to no-fee schools are recognised as candidates in likely financial need and are exempted from supplying certain information.

The deadline for applications for financial aid for next year is November 1.

Students then get pre-approval for funding, ahead of final registration at the universities and colleges. They apply separately to universities or colleges, which usually provide temporary approval pending the matric results.

When matric results are issued, the Department of Basic Education system feeds these directly into the NSFAS system, so the students don’t have to do this.

The NSFAS system will SMS the students to confirm that the matric results are loaded.

Once the institution of choice is finalised and the student registers, the other institutions on the “wish list” are dropped.

“Once you have registered, the university will send us your details,” said Mamabolo.

That includes academic and accommodation fees.

NSFAS then tells the students what it will cover.

NSFAS may cover costs like transport, books and food. Now the system will generate sBux vouchers, via the students’ cellphones, to pay for some of these.

“You can take your cellphone and buy a Big Mac,” said Mamabolo. “You can go to Pick * Pay and generate a voucher.”

Vouchers can be used to buy books. “But you can’t buy law books if you are doing accounting. The system will block it,” said Mamabolo.

This is already running, as during 2014/15, NSFAS issued R250m worth of sBux vouchers directly to students.

Those who aren’t funded either have families above the income threshold or didn’t fill in their applications properly or repeatedly failed courses.

The system is still set to fund those with family incomes of under R120 000 a year.

This still doesn’t take the “missing middle” into account, which is the subject of an ongoing inquiry. NSFAS expects this ceiling to be raised substantially.

“We might see it going to R500 000,” said Mamabolo hopefully. That would extend NSFAS help to families of police, teachers, nurses and those with similar earnings.

The organisation provides both loans (which must be repaid) and bursaries (which don’t have to be repaid).

NSFAS funding has shifted over recent years to favour colleges rather than universities, as that feeds into South Africa’s key skills shortages. These are the technical vocational education and training (TVET) institutions.

“In future, NSFAS will fund critical skills; we won’t fund just anyone who wants to go to university,” said Mamabolo.

Mamabolo said TVET colleges were free to poorer students, as those qualifying for NSFAS help all get bursaries, not loans. Those wanting to go to university are more likely to get loans and second degrees are rarely funded unless they are for scarce skills.

Those who get help to go to university are able to convert 40 percent of their loans to bursaries for their first- and second-year studies if they pass at least 50 percent of their courses, and convert the full loan for their final year to a bursary after passing. So ideally, a student who passes would have to repay 60 percent of the first year’s loan, 60 percent of the second year’s loan, and nothing from the final year.

“The minute your name is on the graduation list, your last year is a bursary,” said Mamabolo.

NSFAS deals with many students who take four years over a three-year degree, and that extra year usually adds another 60 percent of a year’s loan. “While you study, we don’t charge interest,” said Mamabolo. “After graduation, you get 12 months’ grace before we charge interest.”

The unemployed don’t have to repay until they get work; payments start when students earn at least R30 000 a year.

Interest rates are set at 80 percent of the repo rate (that’s the rate that the Reserve Bank charges commercial banks, and is lower than the banks’ prime rate to ordinary customers).

“It’s less than a gym membership,” said Mamabolo of repayments for those at lower income levels.

Students should know upfront what they will have to repay and the new system provides this information.

NSFAS doesn’t always pay for everything and students whose families are above the income threshold may be able to get partial help if they motivate sufficiently.

That means their families must pay in something.

When the families fail to pay their share, the students can’t register.

The Department of Higher Education and Training (DHET) is the main funder for NSFAS, although there are also some private funders.

During 2015/16 DHET provided NSFAS with R6.5bn, which jumped to R11.4bn for this year when an extra R4.6bn was added to fund 71 753 unfunded or underfunded students who lost out in 2013/15.

Mamabolo said the 71 753 students were not the “missing middle” but rather students who should have been funded if there’d been enough money in the NSFAS budget for them at the time.

That list of students was compiled by the universities and handed to the Presidency, which passed it on to NSFAS to get the funding handed over.

“That’s on track,” said Mamabolo.

But he warned that the extra funding for those 71 753 students did not exempt them from any payments that their families were supposed to have made, and this is often the source of conflict. “Their own debt they are expected to pay.”

Gauteng students received the most from the National Student Financial Aid Scheme last year - R2.3 billion.

KZN university students received R1.2bn and the Eastern Cape R1.1bn. The figures exclude technical and vocational educational and training colleges.

Nationally, the Tshwane University of Technology students get the most NSFAS help - 19 665 students receive R696 million.

This is followed by Walter Sisulu University in the Eastern Cape with 13 539 students and aid worth about R450m, the University of Limpopo with 12 548 students and aid worth about R425m, the University of Joburg with 9 658 students getting about R500m, and the University of KZN with 8 355 students and about R450m.

There are seven other institutions which each receive more than R300m: Unisa, the University of Pretoria, the University of North West, the Durban University of Technology, the University of Fort Hare, the Cape Peninsula University and the University of Zululand.

The National Student Financial Aid Scheme (NSFAS) has been on a campaign to get past beneficiaries to repay their student loans so the next generation can be educated.

“It was important for me to repay my loan as soon as possible so that NSFAS would be able to help other students who are in financial need, so that they also can have a chance at acquiring a tertiary education and eventually live out their dream,” said Ntombizodwa Dube, pictured left.

“So my husband, who also benefited from the NSFAS when he was studying for his degree, helped me to ensure that we repay the loan as quickly as possible.”

Dube is a physiotherapist at Mamelodi Hospital.

‘It’s important that we lead by example,” said NSFAS spokesman Kagisho Mamabolo, who was himself an NSFAS beneficiary when he was a student at the University of Limpopo, and who repaid his loan.

“I always say I’m a beneficiary of NSFAS. I’m thankful for what NSFAS has done for me.”

NSFAS is currently owed about R14 billion by beneficiaries who completed their studies at TVET colleges and public universities.

The organisation is trying to trace them and a repayment campaign was launched late last year.

“From April 2015 until March 2016, we recovered more than R226 million from debtors,” said Mamabolo.

“We had more than 19 000 debtors that never paid coming forward for the first time.”

But it’s still only a drop in the debt owed and slightly less than the year before.

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