Poor students owe govt R9.8bn

2010-03-16 21:48

Cape Town - The National Student Financial Aid Scheme (NSFAS) has to date recovered just over a quarter of the R12bn it has loaned to poor students, according to a report released in Cape Town on Tuesday.

"NSFAS has recovered only R3.2bn (26%) of the total R12bn in funds it has loaned - the second-lowest recovery ratio globally among student financial aid schemes," the document states.

The report - compiled by a ministerial committee following a review of the NSFAS - was released for public comment by Higher Education Minister Blade Nzimande.

Notwithstanding the billions in outstanding loans, it recommends that aid to needy students be increased to cover the full cost of their studies.

Underfunding creating drop-outs

Briefing journalists, Nzimande said the review committee had found underfunding to be one of the main reasons for students dropping out and not completing their courses.

"Some of the committee's key findings show that the amount of NSFAS funding available falls far short of demand and that there are significant gaps between the NSFAS award and the full cost of study for many students.

"The underfunding is a contributing factor to the high attrition rate in our university system," he said.

Review panel chairperson, Professor Marcus Balintulo, said that of the students who had benefited from the scheme over the years, almost a third were still registered.

"Of the 67% who have left the system - and this is the frightening one for everybody - 28% of them have completed. Seventy-two percent have dropped out of the system."

New financial aid model

The funding gap was one of the main reasons for this.

"That's why, in all the recommendations we're making, we are stressing the point of full funding for students who get financial aid," he said.

The report recommends a higher education student financial aid model with three components. These include:

Full state subsidisation of poor students and those from working-class backgrounds, to be progressively realised over a specific period;

An income-contingent loan scheme for the children of public sector employees earning salaries up to a maximum of R300 000 a year; and

An income-contingent loan scheme funded by the state or other agency for students from lower middle-income families.

Plan going to Cabinet by August

It says the funding requirement for the first component - fully-subsidised education for poor students - is "considerable" relative to the current NSFAS model.

"Preliminary costings show that in the most conservative scenario... (it) would require R5.2bn in 2010, compared to current state funding of NSFAS, approximately R2.2bn.

"However, if we assume that at least 25% of the student population is from poor or working-class backgrounds, which is a more realistic scenario, then the cost goes up to R9.2bn in 2010," it states.

Nzimande said it was his department's intention to take the report's recommendations, and an implementation plan, to Cabinet by the end of August.