/ 24 June 2016

Blade Nzimande’s R1bn varsity debt

Universities have stated the delay in payment of funds was having a detrimental effect on their cash flow.
Universities have stated the delay in payment of funds was having a detrimental effect on their cash flow.

Five of the country’s 26 higher education institutions alone are owed a staggering R549.5‑million for registering almost 10 600 students while they await financial aid, despite most universities not having the budget to accommodate them. Together with amounts owed to other universities, the total debt may approach R1-billion.

This follows the department of higher education’s request in January for universities to accept unfunded first-year students who qualify for financial assistance from the government’s loan and bursary scheme, the National Student Financial Aid Scheme (NSFAS). 

Minister of Higher Education Blade Nzimande personally urged vice-chancellors to register students who had been offered a place at university and who qualified for NSFAS funding, without demanding an upfront payment from them.

Now at least five universities have been left waiting for funding totalling hundreds of millions of rands. A sixth institution, the University of Cape Town (UCT), confirmed that nearly 800 first-year students who qualify for NSFAS funding owe fees “as the funding promised by the minister [of higher education, Blade Nzimande] has not yet been allocated”. UCT, however, did not indicate how much was owed by the students.

The unfunded first-year students at these six universities were, in most cases, over and above those with confirmed NSFAS funding who had already been registered.

According to universities, this was the first time that the institutions had been called on to make provision for the registration of unfunded students and to provide lists briefing NSFAS about those students who required additional budget.

The North-West University (NWU), which heeded the department’s call in January, is owed R108‑million for registering an extra 2 162 first-year students. It was able to admit about 4 500 students from its 2016 NSFAS allocation of R195.2‑million.

Universities said this week that the delay in the payment of the funds was having a serious effect on their cash flow, as they were assisting students financially with allowances for meals and textbooks.

Among those that have forked out millions of rands to unfunded first-year students is the University of Johannesburg (UJ), which has dished out R46‑million for textbooks and accommodation to 1 552 students.

NWU warned that if the students’ fees were not paid by NSFAS they would be barred from registering next year and would “most probably” have to discontinue their studies. “The NWU will suffer substantial financial losses because the university has already given financial advances to students to enable them to buy books, food and for accommodation purposes. To date we have received no communication nor funding in this regard,” it said in a statement.

Nelson Mandela Metropolitan University (NMMU) spokesperson Debbie Derry said that the university has had “absolutely no word from the department or NSFAS” since the January announcement.

“We have approached them on a number of occasions. We are met with a standard reply that they’re still busy with the calculations.”

Derry said that their policy required that all first-semester fees be paid before students return for the second semester. “Many of these students make use of off-campus accommodation and the landlords are unlikely to re-accept them for the second semester while having unpaid first-semester fees.”

NMMU’s executive director of finance, Michael Monaghan, said that, if the 1 379 unfunded first-year students had paid the upfront fee as a down payment, as was the case previously, the university would have received about R7-million.

“NMMU is doing what it can to assist students who are academically deserving but financially challenged. Like all other institutions of higher learning, however, it does not have a bottomless pit of resources.”

UJ’s director of student finance, Mzwakhe Matukane, said they have received no formal communication concerning the delay in payment.

“However, NSFAS did indicate that they will make a decision after they receive lists from universities. This is to ensure an equitable apportionment of funds to all universities.”

Matukane added that there was increasing uncertainty over whether all the students, whose details the university had submitted to NSFAS, would be awarded some sort of financial assistance. 

Shirona Patel, head of communications at the University of the Witwatersrand, said: “Generally, universities have long been functioning under difficult environments. However, this is more pronounced this year.”

But she said that the financial challenges facing the university could not be attributed to this cohort of first-year students. “The department’s zero-fee subsidy received between January and April has, however, assisted to minimise the cash flow impact.”

Willa de Ruyter, spokesperson for the Tshwane University of Technology, confirmed that the institution had requested an allocation of R315.6‑million from NSFAS for the funding of 8 525 students.

“According to [a NSFAS] circular, confirmation of the funding was supposed to be sent to universities by April. Funds are not paid automatically, as it is claimed through students signing contracts. However, the availability of funding is still in question as we have not received a response yet.”

University of KwaZulu-Natal spokesperson Lesiba Seshoka said that, although funding delays did place additional financial pressure on institutions, his university remained “committed to finding sustainable solutions” to assist qualifying students.

UCT spokesperson Patricia Lucas said the university was engaging with NSFAS and was hopeful that funds would be provided soon. “UCT has tried to secure information regarding the allocation for first-years, but unfortunately the information is not yet available.”

She said that the students required allowances, which UCT has provided, “resulting in an increased cash flow utilisation over the period”.

Red tape holds up extra R2bn in student aid
The department of higher education said that the government had allocated an additional R2‑billion to the National Student Financial Aid Scheme (NSFAS) to ensure that both existing and new students were supported financially.
It said universities had been requested to submit information to NSFAS on all qualifying students who were identified as unfunded or underfunded in 2013, 2014 or 2015.

They also had to furnish details of first-year students in 2016 who had been allowed to register but were not covered by the original budgeted allocations sent to universities.

The process depends on universities submitting data after completing the intake of NSFAS-eligible students, it said.

The department said that, once it has received this information, it will be verified to see how many first-year students qualify for NSFAS funding. It will also assess whether further funding is required on top of the extra R2‑billion allocation.

Asked when the monies would be paid to universities,the department said: “Government will continue to work to ensure that all NSFAS unfunded, registered students are supported.”

Commenting on the delay in payments, it said that the registration period was delayed this year because of the student unrest, adding: “Full details of students who applied, those who have been funded and those who may not be funded due to insufficient funds had to be collated and verified.”

The department said it was aware that some universities were under strain “with regards to their cash flow”.

“However, all universities were assisted with an upfront payment from NSFAS and also received a contribution in January and April towards the zero percent fee increase from government.” — Prega Govender