NSFAS Loan Scheme: Comprehensive Funding Model and Legislative Framework

W W W . N S F A S . O R G . Z A Loan Scheme V u y o k a z i M a f i l i k a

2 W W W . N S F A S . O R G . Z A Q & A Conclusion Introduction Purpose The Loan Scheme Stakeholder Engagement Workshop

W W W . N S F A S . O R G . Z A Preamble Determine and advise alternative financing and operating models for funding poor and missing middle students To set in motion a process towards a comprehensive funding model Defines the eligibility criteria and conditions for granting of loans to students

W W W . N S F A S . O R G . Z A The Loan Scheme Glossary of terms Borrower Lender Loan Agreement Form (Laf) Exit Missing Middle Surety Academically Eligible Student Eligibility Assessment Financially Eligible Student NSFAS Consent Form Academic Term N+1 Rule Metro

Applicable Legislation 5 W W W . N S F A S . O R G . Z A T HE LO AN SCHEME Constitution Of The Republic Of South Africa (1996) Higher Education Act, 1997 (Amended) National Student Financial Aid Scheme Act, 1999 (Amended) Public Financial Management Act 1 Of 1999 Continuing Education And Training Act 16 Of 2006 National Credit Act 34 Of 2013 The Following Policy Standards Are Also Applicable: National Development Plan (2030) The White Paper For Post-school Education & Training (2013) Norms And Standards For Funding TVET Colleges NSFAS Eligibility Criteria And Conditions For Financial Aid (2024)

6 W W W . N S F A S . O R G . Z A T HE LO AN SCHEME Purpose Provide a consistent approach to assess & determine financial & academic eligibility, Comply with the provisions of the national student financial scheme act 56 of 1999, and all its amendmends. Provide the criteria and conditions for granting loans to eligible students.

7 W W W . N S F A S . O R G . Z A A right to obtain a loan cannot be construed from any provision of the Act. T HE LO AN SCHEME Principles The loan is aimed at students from the missing middle . NSFAS seeks to provide ongoing funding only if the student meets the criteria for continued support. If an eligible student becomes ineligible due to cost-of-living related increases, NSFAS reserves the right to cancel the loan and reconsider the funding based on the student representation If A student switches to A different qualification not approved for the loan of targeted qualifications, they will cease to receive funding.

8 W W W . N S F A S . O R G . Z A T HE LO AN SCHEME Principles NSFAS assesses the annual combined household income as guided by the South African Legal Framework. Accepting a NSFAS loan requires a beneficiary to pay back the funds in monetary terms. Loans are offered to both under- and graduate qualifications.

W W W . N S F A S . O R G . Z A T HE LO AN SCHEME Applicability Students who are enrolled for qualifications as specified in the document. Institutions that offer such qualifications will be subjected to requirements and conditions as set out in the document, Students receiving non-NSFAS loans, bursaries or scholarships will not receive NSFAS loans, Students studying at an institution other than a public university or TVET are not funded. Students enrolled for qualifications that are not on the identified list for loan funding.

W W W . N S F A S . O R G . Z A Loan as development tool The total value of loans offered is subject to available budget, Loans are interest free during study but bears interest after exit, Priority ranking may be applied subject to available budget, Loans may be allocated to cover study related costs, i.e. Tuition, accommodation & learning materials, NSFAS is exempted from conducting affordability assessments.

W W W . N S F A S . O R G . Z A Loan Offer and Pre-agreements Each eligible student is required to sign a pre-agreement and quote. Each eligible student must accept and sign the NSFAS loan agreement form.

W W W . N S F A S . O R G . Z A Loan Conditions & Criteria Citizenship and place of study : South African citizens and permanent residents, South African valid identity, Intend to register at a public university or TVET, Students who do not accept their loan offer within 30 days are assumed to have declined the loan.

W W W . N S F A S . O R G . Z A Loan Conditions & Criteria Household income: Where the applicant is unmarried combined household income = biological, or adoptive mother and father and the student, Student under legal guardianship combined household income = legal guardian and the student, Students who unmarried or independent of their parents and satisfy the definition of an adult learner will be exempted from providing NSFAS declaration form. NSFAS will use other third parties over & above the declared household income to determine an applicant s financial eligibility, All students are required to submit a complete, accurate and a signed consent form. The applicant s annual household gross combined income should be above R350k and below R600k.

W W W . N S F A S . O R G . Z A Loan Conditions & Criteria General conditions: Must intend to register for one the specified programmes, The loan term is determined for a max period of 60 months from date of employment, The loan scheme will distribute on a 70/30 scale, Stem (70%) and social science (30%), NSFAS may re-assess eligibility of any student for each subsequent academic term

W W W . N S F A S . O R G . Z A Financial Eligibility Criteria Students who change institution types will no longer qualify for funding, Student are funded for one qualification at any one time, A student who no longer complies with the University N+1 or TVET N+ rule may not receive a loan, Parents or guardians are required to sign a surety for the loan, A student is required to maintain a 60% academic performance to keep the loan, Successful students may not be liable for registration fees.

W W W . N S F A S . O R G . Z A Academic Eligibility Criteria To continue to receive funding a university student need to pass 60% of their course credits in an academic form, A TVET student need to pass 3 out of 4 subjects for report 191 level, A loan may be awarded to students progressing to the next NC level if they passed at 5 subjects in the previous n levels, Only NSFAS approved university and TVET academic progression pathways are funded.

W W W . N S F A S . O R G . Z A Loan Disbursement Loan disbursement will cover tuition fees inclusive of registration fees, Accommodation, study materials and/or equipment, Accommodation will be capped at R50k for institutions in the metro, R41k for those in the non-metro areas, Prescribed learning materials have a R5460 per annum cap,

W W W . N S F A S . O R G . Z A Loan Repayment Loan repayment term is 60 months, Students must notify NSFAS regarding their employment status within the first 3 months, Repayment of the loan plus accrued interest must be in monthly instalments from the 1stmonth of employment, The number of instalments will be determined by NSFAS from time to time, The lower the student s income the lower the monthly instalments, The higher the income, the higher the instalments, Commencement of recoveries can be delayed until the student secures employment.

W W W . N S F A S . O R G . Z A Immediate Repayment of loan Dishonest or materially inaccurate statement in his/her application The institution refuses to register or admit the student, The student receives any other financial assistance in connection with the course of study, Breach of any of the set guidelines, Failure to academically progress, Commits crime & is prosecuted, Student deregisters a programme funded through the NSFAS loan.

W W W . N S F A S . O R G . Z A Interest Rates Prime rate as at 01 April annually less the 100-basis point, Interest rate on the outstanding loan amount will be calculated daily and compounded monthly in arrears, Interest accrues 12 months after the date of exit from the academic institution, The capital sum outstanding in line with the common law principle of in- duplum.

W W W . N S F A S . O R G . Z A Loan Conversion Achievement of 70% average in registered modules and completes studies in record time will be eligible for a 50% discount of the total loan amount.

W W W . N S F A S . O R G . Z A Defaults & Credit Bureaus If a student fails to inform or disclose employment status within 30 days, NSFAS has the option to compel the student s employer to make deductions, If the above fails, NSFAS has the option to initiate collection from the surety, If the above fails, NSFAS may list both the student and the surety as defaulters, Both the applicant and the surety will be sent notifications regarding their defaulting status, Both will be given 14 days from the day of the letter to make payments, Both parties are entitled to contact and require from the credit bureau to disclose and/or rectify any incorrect information held and published.

W W W . N S F A S . O R G . Z A Failure to fulfil loan repayments If circumstances are not favourable to the students to his/her obligations, a student may submit an appeal for the extension of time, The appeal must contain the following: Proof of employment Reasons for not being able to meet repayment obligations, Any other additional information required by NSFAS.

W W W . N S F A S . O R G . Z A Cession The Loan Scheme However, NSFAS is entitled in its entire discretion and at any time to cede, assign and transfer any or all rights and obligations under this agreement. The student or surety is not entitled to cede, assign or transfer any of his/her rights without the prior written consent of NSFAS

25 W W W . N S F A S . O R G . Z A Thank you!