​Student aid funding scheme may have a new future

Students protesting at UJ's Kingsway Campus on January 27 2014 over the university's lack of help after NSFAS funding was delayed. (Thulani Mbele, Gallo)

Students protesting at UJ's Kingsway Campus on January 27 2014 over the university's lack of help after NSFAS funding was delayed. (Thulani Mbele, Gallo)

The National Student Financial Aid Scheme (NSFAS) could soon be forced to take a backseat if Cabinet endorses plans for a new entity aimed at harnessing private sector support.

The development of a blueprint known as the Ikusasa Student Financial Aid Programme proposes the establishment of a public-private partnership arrangement between NSFAS and a new special purpose vehicle, a private management company, ManCo.

A ministerial task team appointed by Higher Education Minister Blade Nzimande to look into the creation of a support and funding model for poor and “missing middle” students devised the strategy. Missing middle students are those deemed too well-off to receive NSFAS funding but too poor to pay for their own tuition.

Chaired by former FirstRand chief executive Sizwe Nxasana, the task team gazetted its report for public comment on Thursday last week.

The relationship between NSFAS and ManCo would be crucial for several reasons because, according to the report, “given NSFAS’s legacy issues it will be very difficult to restore the confidence of the private sector to start funding NSFAS”.

Diane Parker, deputy director general for university education in the department of higher education, said that, although there was “a noticeable improvement” in the functioning of NSFAS in the recent past, “at the present time, the private sector does not have the confidence in NSFAS systems to simply invest at the levels required and let NSFAS take complete control”.

“The private sector is risk-averse and wants to have some guarantees that its funds will be well used. While over the long term NSFAS may well meet these requirements, at the moment that confidence is not there,” she said.

The new entity needs an aspirational brand, reputable operations and evidence of recoverable loans to attract private funding.

“The known NSFAS operation has many challenges, has many negative public views regarding the recovery rate of loans and, according to the funding experts, would not be appetising to private investors,” says the report.

Ikusasa’s vision is to be a government-investor partnership with an operating model “that is inherently different to the current NSFAS model”.

If the R600 000 annual household income is used as a cut-off point for eligibility for funding missing middle students, about 65% of university students would have to be funded annually at a cost of R42-billion.

NSFAS is based in Cape Town, but the report proposes that Ikusasa’s new headquarters be in Gauteng.

Government and NSFAS will participate in Ikusasa through loans, grants and subsidies, which will be directed through NSFAS into ManCo.
Another entity, FundCo, will own ManCo. FundCo will be tasked with administering funds received from private investors. NSFAS will continue to be the conduit for all government funding.

Professor Ahmed Bawa, chief executive of Universities South Africa, said that, although NSFAS had given hundreds of thousands of students the opportunity to take up undergraduate studies, “it is also true that the experience of students who have accessed NSFAS grants has generally been unsatisfactory and even tortuous”.

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