Minister of Higher Education, Science and Innovation, Dr Blade Nzimande Statement on the beginning of consultations on the Comprehensive Student Financial Aid Model
Programme Director, Mr Ishmael Mnisi
DDGs present
Members of the media
Ladies and gentlemen
Good Afternoon
I have called this press briefing to inform you of a process that we embarked upon as from today, to consult with post-school education and training stakeholders on issues relating to student funding policy.
Today I met with Vice Chancellors and Principals of public universities and TVET colleges as well as with national student leadership in both sectors. I have a series of consultations planned also for next week, and intend to engage as widely as possible on the recommendations of the Ministerial Task Team that I appointed in 2021 to make proposals for a future sustainable model of student financial aid.
I am aware that, in opening up the discussions on the recommendations made by the Ministerial Task Team on student funding, the public discussion on these matters is likely to commence. This is a matter that generates significant debate and interest, given its importance to the sustainability and transformation of our public education system.
By way of background, following the shortfalls experienced by NSFAS in 2020 and 2021, we reprioritised our departmental budget to ensure that all deserving, NSFAS-qualifying students were able to receive funding for the 2021 and 2020 academic years.
Irrespective of shortfalls in funding that NSFAS continues to have because of the high demand for student financial aid, NSFAS funding increased more than fivefold just in 6 years, from R5,9 billion in 2014 to R49 Billion in 2022.
In our brief survey of student funding models globally, South Africa’s funding model is amongst the most advanced and generous in the developing world.
This is a remarkable achievement in a country facing so many social challenges and the fully-subsidized model shows a massive commitment of our government to supporting poor and working class students to access higher education.
Indeed our own cohort studies show that NSFAS students perform on average significantly above the general student population, which is one argument supporting the continued investment in financial aid for higher education and training students.
Given all these funding challenges, Cabinet directed that our Department develops a comprehensive and durable student financial aid model.
In June 2021, I appointed a Ministerial Task Team (MTT), chaired by Professor Xoliswa Mtose, the Vice Chancellor of the University of Zululand, to support the work of the Department of Higher Education and Training, the National Student Financial Aid Scheme (NSFAS) and National Treasury (NT) in their critical work to conceptualise a new student financial aid model for the South African higher education and training system.
The work of the MTT was carried out in two phases: the first to support immediate recommendations for the 2022 budget process, and the second to make medium to long-term recommendations for the future.
The MTT submitted an initial report to the me in July 2021, which was also presented to Cabinet and its final report in 22 June 2022.
The MTT explored three high level policy models, supported by financial models, to guide the decision-making about its final recommendations.
I want to emphasize that a new model cannot be developed at the expense of funding institutions to remain sustainable and to provide quality education and necessary skills to grow our economy.
I also wish to indicate that the MTT recommendations are under consideration by both my Department of Higher Education and Training and are under discussion at the cabinet level. In the meantime, with the support of National Treasury, and based on the modelling done within the MTT, the financial support to ensure the continuation of the current model is in place over the medium term. This will ensure that we have stability over the next period while we are looking at options for a new comprehensive new model.
The MTT report incorporates both phases of the MTT work, and includes detailed economic modelling conducted for the MTT; a review of previous student financial aid policy reviews and research; work on qualifications pathways; a survey of student funding sources in universities other than NSFAS funding; and detailed exploration of alternative funding sources for student funding, with a particular focus on the missing middle.
As part of its work, the MTT reviewed a number of solutions to missing middle funding, outlining a number of loan and bursary options already available within the student funding landscape.
A range of proposed emerging funding solutions were explored for the short and medium term, taking into account the review of work done and the engagement of the MTT with some existing providers of student funding opportunities.
We are public releasing the eighteen (18) recommendations as per the Ministerial Task Team upon which we are consulting our PSET stakeholders today on the new student funding model.
In summary, the recommendations suggest the development of a ten-year plan towards developing a comprehensive and sustainable student financial aid model, drawing on a diversity of funding sources, and integrating work across government.
I look forward to discussing further these recommendations in more detail with key stakeholders in the sector over the next few weeks then present the final recommendations to Cabinet for consideration.
Thank you very much
Eighteen recommendations of the Ministerial Task Team
Recommendations
The Report makes a number of recommendations, while pointing to areas where further work will be required:
1. Government must work towards a student financial aid model that is comprehensive, providing differentiated support to students from different socio-economic backgrounds, drawing on a range of funding sources.
A ten-year plan should be developed to outline how this model will be developed and changed over time, to a fully-functioning, sustainable, affordable, and regenerative financial aid scheme.
Although it is envisaged that all elements of the plan should be in place within five years, the system may take longer to mature. The plan must outline the necessary transitional arrangements to support work towards a new model.
2. In the medium term, it will be necessary to continue with the status quo funding for students from poor and working-class backgrounds, by providing adequate funding to support the fully-subsidised model, while a new plan is being developed and additional diverse funding sources are identified for the comprehensive model.
3. An engagement and communication plan must be developed as part of the work towards a comprehensive student funding model.
4. A comprehensive model should incorporate loan funding options for students in the missing middle. Apart from the existing scholarships and bursaries available to these students a fully comprehensive model must include a loan component.
The proposed ideal model is a wholesale lending scheme, which draws on a range of funding sources and requires the establishment of an independent entity to manage the loans.
While this is not the most affordable model in the short term, in the long term it would allow the State to provide access funding to all students who require it, and most importantly build a regenerative funding model which allows for funding to be returned on an income-contingent basis with the support of the tax authority. The MTT recommends that government should plan for the phase in of such a model over time.
5. In the immediate short term, the MTT recommended that government should explore the possibility of a government guarantee for commercial bank loans. This would allow for the funding of missing middle students in particular, ideally from 2023 onwards, and also test the take-up of such loans while other loan models are explored.
6. Chapter four of the MTT report contains several recommendations for possible alternative sources of funding for missing middle students. These models will be explored further by government as part of the development of the ten-year plan, in particular as part of working towards a comprehensive model. In particular, the Department will urgently investigate the possibility of targeted support from the Public Investment Corporation (PIC) for a model targeting the children of public servants.
7. The MTT recommends that the current threshold for supporting students from poor and working-class backgrounds on the fully-subsidized model should be retained. However, an annual inflation-linked increase should be built into the model, to ensure that the threshold is not eroded over time. As part of a comprehensive model, it may be possible, over time, to provide support for students who fall outside of this threshold.
8. The report also recommends that government explores more nuanced tools for determining financial eligibility in the context of the development of a comprehensive student financial aid model.
9. As a comprehensive model is put into place, students should be able to access loan funding for second qualifications in key areas. While NSFAS continues to fund only first undergraduate qualifications, there should be opportunities within a comprehensive model for students to follow second qualification study routes or enter postgraduate studies.
10. In addition, it is proposed that as part of the development of the new model, incentives should be explored within the model to allow for students who complete in the minimum time to obtain additional funding for an honours or advanced diploma qualification. In this regard, incentives can also be explored as part of a loan model, to target scarce skills areas.
11. It is proposed that as part of the development of a comprehensive student financial aid model, government funding for higher education and training should be strategically planned and coordinated in the model.
This means for example that SETA funding supporting students for work-integrated learning opportunities and bursary funding in post-school education and training should be part of a coordinated strategy, linked to areas of scarce skill. The same applies for other government departments providing bursary funding.
This may require the establishment of a national structure to better coordinate the funding available in the sector as a whole, in both TVET colleges and universities.
12. As part of the development of a coordinated strategy, a comprehensive (updateable) database of student funding opportunities in the post-school education and training system must be developed.
13. The MTT recommends that the funding model of TVET colleges be changed so that tuition fees are provided to Colleges through the TVET subsidy mechanism and not through NSFAS.
The current model of supporting TVET college students with the tuition fee component of their studies in Ministerially-approved programmes is not efficient and effective. This could also provide significant gains for NSFAS in improving the administration of TVET college bursaries.
14. Improvements must continue to be implemented to ensure that academic performance criteria are strongly built into the student financial aid model.
15. Efficiencies in the current status quo model should be pursued actively. This includes a substantial reduction in fraud and double-dipping; strict applications of allowance limits and allowance eligibility; and efficient application of academic performance criteria.
NSFAS and the Department should work with other State agencies, including universities and TVET colleges, the South African Revenue Service (SARS) and the South African Social Security Agency (SASSA) to effect this.
16. Caps on the allowance levels available for student accommodation must be put in place and must be responsive to the varying conditions and availability across different locations. Improvement in the levels of appropriate regulation of accommodation accreditation must also continue.
17. The regulation of tuition fee increases will form an important part of the development of a comprehensive funding model and should be implemented.
18. Postgraduate financial aid must form part of a comprehensive model for student financial aid. In addition to bursaries and scholarships already available in the system from the State (NRF) and universities themselves, as well as other relevant sources, a hybrid model of student financial aid can incorporate financial aid at the point of access for postgraduate students in financial need.
