Department of Higher Education and Training Feedback on further developments towards a Support and Funding Model for Poor and “Missing Middle” students . Presidential Commission 23 rd / 24 th March 2017
Agenda Introduction Student funding policy decisions ISFAP Pilot implementation ISFAP PPP Feasibility Study Funding and Design to enable the implementation of ISFAP Key questions raised by the Commission
Agenda Introduction Student funding policy decisions ISFAP Pilot implementation ISFAP PPP Feasibility Study Funding and Design to enable the implementation of ISFAP Key questions raised by the Commission
Introduction • The Ministerial Task Team (MTT) completed its report on a financial aid and support model for poor and missing middle students • On the 2nd November the MTT presented its Report to the Cabinet and gained government support for the following: Cabinet noted the ISFAP blueprint Cabinet approved that the MTT Report be published in the Government Gazette for public comment Cabinet approved that the ISFAP pilot would go ahead to test certain aspects of the proposal at selected universities and one TVET College Cabinet approved that parallel to the Pilot a full feasibility of the ISFAP PPP in line with National Treasury regulations should go ahead • The Department of Higher Education and Training (DHET) and the MTT Chair presented the ISFAP blue print to the Presidential Inquiry into Higher Education and Training on the 21st November 2016.
Governance and Operating Structure Minister specifies governance structure and rules and criteria PPP Agreement Governance
Student Support Student Payments Other Support All funded students University fees Academic support: Tutorial support Academic development Extended Programmes Accommodation Managed social support Books University Life skills training Meals Mentoring First Year Experience Stipend Medical support Psycho-social Support Oversight & admin Verification of students & information Admin systems & processes Continuous monitoring, preventative action, remedial steps, student support
ISFAP Sources of Funding Loans, EFCs, grants/subsidies, bursaries, risk capital
Introduction • Since receiving Cabinet approval, various components and work streams have been established and are progressing well: ISFAP steering committee Pilot implementation to test certain aspects of the model PPP feasibility study Detailed design and build of manco/fundco Funding work stream that includes: Overall direction and funding lines (commercial etc..) Social impact bonds to fund student wrap around support BBBEE skills development SETA’s Business/portfolio modelling and interface with National Treasury Legal
Introduction • A Project steering committee (steerco) has been established; includes the DHET, National Treasury, ISFAP Pilot team and MTT members. Chaired by Sizwe Nxasana • Steerco oversees the implementation of the Pilot and the feasibility study and manages all processes towards the final model that will be taken through to Cabinet for approval (aim for September 2017) • A full schedule of meetings has been diarized until July: 12 weekly TEUF board meetings (including ISFAP pilot) 6 weekly overall project steerco 3 weekly project management weekly pilot management • The high level project plan taking ISFAP through to cabinet sign-off has been developed. • ISFAP operational and funding budgets prepared and documented
Agenda Introduction Student funding policy decisions ISFAP Pilot implementation ISFAP PPP Feasibility Study Funding and Design to enable the implementation of ISFAP Key questions raised by the Commission
Student Funding Policy Decisions • The following Policy Decisions have been devised and implemented in the ISFAP pilot: Maximum Loan Expected Family Contribution by Household Means Loan / Grant ratio by Household means Total Cost of Study • Maximum Loan has been calculated on the duration of the course relating to average expected salaries, this has capped the loans, and restricted where they can be offered • Expected family contribution has been set at R0 for households whose income is less than R300k, 10% of total cost of study for household income R300k – R450k, and 18% of total cost of study for household income R450k- R600k
Loan and grant decision matrix – 4 year qualification Optional loans according to higher loan repayment (due to drop out) plus household means 1 st 2 nd 3 rd 4 th Year Year Year Year Max Missing Middle Loan Loan Loan Loan Grant Household Income EFC EFC EFC EFC Band Loan Grant Loan Loan Grant Household EFC EFC EFC EFC Means Loan Lon Grant Grant Loan Grant Poor Grant Grant Grant Grant Household Income Band (below tax threshold) Expected Family Contribution (EFC) increases by household means Funding will be made available for n+1 years – in all categories additional year includes a loan (to incentivise success)
Student Funding Policy Decisions • For business modelling purposes the Total Cost of Study has been calculated referencing the information contained in the March GTAC performance review of NSFAS, giving an average Total Cost of Study of R92k • Within the pilot the total cost of study has been supplied by the institutions directly (higher than average due to courses and institutions in pilot) and for a 4 year course (accounting) is R135k made up of the following: tuition fees R53,000 accommodation R40,000 meals R20,000 books R6000 living allowance R7500 R8500 (only in 1 st year) calculator / laptop
Loan and grant decision matrix for 4 year qualification program Loans according to higher loan repayment (due to drop out) plus household means year 1 year2 year 3 year 4 Amount % Amount % Amount % Amount % R450k - R600k Loan 40,000 30% Loan 49,200 39% Loan 102,200 81% Loan 102,200 81% Grant 70,700 52% Grant 53,000 42% Grant - 0% Grant - 0% EFC 24,300 18% EFC 24,300 19% EFC 24,300 19% EFC 24,300 19% R300k - R450k Loan - 0% Loan 40,000 32% Loan 113,000 89% Loan 113,000 89% Grant 121,500 90% Grant 73,000 58% Grant - 0% Grant - 0% EFC 13,500 10% EFC 13,500 11% EFC 13,500 11% EFC 13,500 11% R150k - R300k Loan - 0% Loan - 0% Loan 73,500 58% Loan 126,500 100% Grant 135,000 100% Grant 126,500 100% Grant 53,000 42% Grant - 0% EFC - 0% EFC - 0% EFC - 0% EFC - 0% R75k - R150k Loan - 0% Loan - 0% Loan - 0% Loan 73,500 58% Grant 135,000 100% Grant 126,500 100% Grant 126,500 100% Grant 53,000 42% EFC - 0% EFC - 0% EFC - 0% EFC - 0% R0k - R75k Loan - 0% Loan - 0% Loan - 0% Loan - 0% Grant 135,000 100% Grant 126,500 100% Grant 126,500 100% Grant 126,500 100% EFC - 0% EFC - 0% EFC - 0% EFC - 0%
Agenda Introduction Student funding policy decisions ISFAP Pilot implementation ISFAP PPP Feasibility Study Funding and Design to enable the implementation of ISFAP Key questions raised by the Commission
Proposed ISFAP pilot: suggested structure Governance structure Thuthuka Education Upliftment Financial Public sector institutions appointees Donations & “soft” loans DFIs, Foundations, etc (New company) Banks Financial Companies institutions Limited group of students
Implementation: Proposed ISFAP Pilot 2017 Goals of the ISFAP Pilot (test areas of ISFAP): • Selection process (specific areas of this only) Household means test Universities list for selected courses Academic / behavioural strength of student Focus on professions in high demand, some general formative degrees, and artisans; and Use of the NBT test (selection into professional programmes) • Contracting and disbursements • Structure University partnerships • Private sector grant capital raising • Design of appropriate student support • Determination of Social Impact Bond (SIB) • Application of funder constraints • Administrative requirements
ISFAP Pilot agreed distribution of students Humanities General Medical Chartered Prosthetists/ Universities Pharmacists Actuaries Engineers (selected Formative doctors Accountants Physiotherapists majors) Degrees University of 40 20 Venda Walter Sisulu 20 20 University University of the 100 80 120 90 Witwatersrand University of 20 10 20 10 Cape Town University of 100 20 100 100 Pretoria Tshwane 50 University of Technology University of 50 20 10 KwaZulu - Natal 290 20 110 240 140 70 40 90 Total
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