When one of South Africa’s most distinguished executives, Sizwe Nxasana, resigned as chair of the board of the National Student Financial Aid Scheme (NSFAS) because of “extreme pressure” on the system, the only question many observers of the scheme had was: “What took you so long?”
NSFAS is a monster that can destroy the reputation of any good person. It remains the single most important embarrassment in the management of higher education since democracy.
Unfortunately, the critical lessons to be learnt from the NSFAS debacle are often lost in emotive stories about hungry students sleeping in toilets because monies from the scheme had not yet been paid out.
NSFAS was poorly conceived. The basic idea was, as usual, a good one. Who could argue against a loan/bursary scheme to support poor students on grounds that once employed they pay back some or all of the money so that it circulates back into the system to support successive generations of students?
But first, you have to get them to pay back the money in a country and a culture where even the former first citizen, President Jacob Zuma, had to be compelled by the courts to do exactly that.
Problem is NSFAS operated a debt recovery system based on goodwill and trust rather than effective systems of recouping state funds. Few paid back.
Last year NSFAS moved from pleading to issuing “stern warnings” for students to return the money. The scheme was running after 467,281 debtors to return about R20bn. A fraction of that amount came in. Eventually, NSFAS gave up trying.
Then, to make matters worse, Number One decided on December 16 2016 to announce free higher education – just ahead of the ANC’s elective conference.
You did not need a module in political science to see through this last-gasp attempt to influence party elections in favour of his former wife. She wins, the then president was likely to stay out of prison. She loses, orange jumpsuits were a real possibility.
In the process, the announcement transferred NSFAS from the general hospital ward straight into ICU. Applications skyrocketed from the usual 200 - to 250,000 prospective students to more than 600,000 seeking funding. Those who had given up on studies reapplied.
NSFAS found itself managing the old loan book (they were told that students registered before this new deal still had to pay back monies) and implementing free higher education. NSFAS, managing R21bn debt for 400,000 students, effectively collapsed under the weight of the new administrative demands.
The announcement came a mere two weeks before the release of the Grade 12 results and another two weeks before many campuses reopened. It did not help that one of the opposition parties encouraged students to show up at universities in their numbers.
Predictably, a storm of protests started on campuses around the country as students complained they had not yet received their payouts. University administrators scrambled in the face of a cash-flow crisis as they waited for government to make the allocations in line with the promise of free higher education.
A student at an Eastern Cape university earlier received a whopping R14m in her personal bank account and, unbelievably, went on a shopping spree. Meanwhile media houses printed front page stories of desperate students with unresolved debt on their campuses and no money for food.
Students started to demand that CEO, Steven Zwane, and also the board chair, Nxasana, step down. The new Minister of Higher Education had no choice but to suspend NSFAS activities until the mess with current applications was cleaned up before 2019 applications could be considered. The NSFAS board would also be dissolved and the scheme would be run by an administrator.
Truth is, these actions might relieve immediate political pressure but will not change anything unless NSFAS itself is fundamentally restructured.
What are the lessons from the NSFAS debacle?
First, when a system of handing out government money is poorly conceived it is very difficult to rebuild. You cannot in SA start with a broken debt recovery system that lets tens of thousands of students off the hook, and then suddenly demand that incoming students pay back their fair share. It is not going to happen.
That is why the income contingent loan system proposed by the Heher Commission set up by Zuma to investigate the possibility of free higher education, is dead in the water. How do you now get students whose families earn more than the R350,000 to pay back their share of loaned funds on employment? A culture of non-payment has set in and the scheme is shown the middle finger with all kinds of opportunistic arguments such as black graduate tax.
Should debt recovery be handed over to Sars, there might be some hope for restoring a functioning system but the horse has already bolted from the NSFAS barn.
Second, a centralised system of managing something as complex as NSFAS for 26 public universities and 50 TVET colleges was never going to work. The previous minister of higher education and training was obsessed with Soviet-style centralisation of public functions. Well, look at the mess. Many (not all) universities have systems and capacity to manage student fund allocations for the relatively small numbers on each campus. Where this is lacking, build that capacity.
TVET colleges are effectively under government control. Continue to keep them under a centralised NSFAS but over a five-year period capacitate those colleges to also manage NSFAS applications and allocations at local level.
Then, whether for colleges of universities, put in place watertight systems to prevent corruption and act swiftly to put criminals behind bars. Unless there are strong measures of accountability built into the funding system at all levels, it provides exactly the kind of vulnerabilities that undermine an efficient system of student funding in the present and a sustainable mechanism for ensuring adequate financing for students in the future.