Department of Higher Education and Training - Justice … · ISFAP Pilot implementation ... • The Department of Higher Education and Training ... MTT Chair presented the ISFAP blue

Department of

Higher Education and Training

Feedback on further developments towards a Support and Funding Model for Poor and “Missing

Middle” students.

Presidential Commission

23rd / 24th 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






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 criteriaPPP Agreement

Governance

Student Support

All funded students

Accommodation

Student Payments

University fees

Books

Meals

Stipend

Other Support

Academic support:Tutorial support

Academic developmentExtended Programmes

Managed social support

Life skills training

MentoringFirst Year Experience

Medical support Psycho-social Support

University

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

• 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

HouseholdMeans

EFC

Grant

EFC

Grant

Grant

Loan

EFC

EFC

Grant

Grant

Loan

EFC

Loan

EFC

Grant

Loan

EFC

Loan

EFC

Loan

Max Missing Middle Household Income

Band

Poor Household Income Band

(below tax threshold)

1st

Year

2nd

Year

3rd

Year

4th

Year

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)

LoanGrant

LoanGrant

LonGrant

Grant

Loan

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

calculator / laptop R8500 (only in 1st year)

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






Proposed ISFAP pilot: suggested structure

DFIs, Foundations, etc

Public sector appointees

(New company)

Financial institutions

Governance structure ThuthukaEducation Upliftment

Banks Financial institutions

Donations & “soft” loans

Companies

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

University of

Venda40 20

Walter Sisulu

University20 20

University of

the

Witwatersrand100 80 120 90

University of

Cape Town20 10 20 10

University of

Pretoria100 20 100 100

Tshwane

University of

Technology50

University of

KwaZulu - Natal50 20 10

Total 290 20 110 240 140 70 40 90

Prosthetists/

Physiotherapists

Humanities

(selected

majors)

General

Formative

Degrees

Chartered

AccountantsUniversities

Medical

doctorsPharmacists Actuaries Engineers

ISFAP Pilot R138m raisedDONOR AMOUNT

A T C SA WIRELESS INFRASTRUCTURE (PTY) LTD 200,000.00

MERCANTILE BANK 200,000.00

ABSA FOUNDATION TRUST 10,000,000.00

HOLLARD 2,000,000.00

CAPITEC BANK LTD 300,000.00

FNB FOUNDATION 40,000,000.00

INVESTEC 4,000,000.00

LIBERTY 1,000,000.00

JSE

COMPENSATION COMMISSIONER 17,000,000.00

SASOL SOCIAL INVESTMENT 3,000,000.00

MMI HOLDINGS

STANDARD BANK OF S A 25,000,000.00

ANGLO AMERICAN

OPPENHEIMER FAMILY TRUST

IDC 2,000,000.00

CHINA CONSTRUCTION BANK 1,000,000.00

LONMIN

ANGLOGOLDASHANTI 306,250.00

NEDBANK 3,000,000.00

ALLAN GRAY PTY LIMITED 20,000,000.00

DISCOVERY

MONDI GROUP 1,000,000.00

SAPPI SOUTHERN AFRICA LIMITED 1,000,000.00

SAFIKA HOLDINGS 250,000.00

VOLKSWAGEN OF SA PTY LTD 1,000,000.00

ASISA 2,200,000.00

SAVILLE FOUNDATION 80,000.00

WOOLWORTHS (PTY) LTD 250,000.00

CORONATION FUND MANAGERS 500,000.00

SANLAM FOUNDATION 3,000,000.00

138,286,250.00

Roles and Responsibilities in the Pilot

Universities and TVET Colleges:

• work with the ISFAP pilot team to select students to be included in the pilot;

• supply the “wrap-around” support following guidelines set out by the DHET and the ISFAP pilot team;

• supply programme managers (50% funded by ISFAP); and

• to utilise specific custom programme management technology to enable monitoring and feedback.

Students

• participate in the first year experience and mentoring programmes;

• attend lectures and tutorials;

• supply regular feedback for monitoring; and

• engage with the support system.

Wrap around support

Funding secured within pilot

• Project managers at universities and TVETs

• Software reporting and tracking

Support Activities:

– Tutorial support

– Life support

– Admin support

– Life skills training

– Mentorship

Wrap around support

Wrap around support

Roles and Responsibilities in the Pilot …

The ISFAP Pilot Team (including DHET representatives)

• the selection of means tested students to be funded;

• the disbursement of funds through appropriate channels for studies, accommodation, books, food and stipends;

• the structure and management of partnerships between ISFAP and universities/TVET college;

• the design and implementation of appropriate student support;

• the determination and monitoring of key performance indicator metrics; and

• the integrated information technology platform* for maintaining and tracking student data across multiple fields, which reflect the areas of “wrap-around” support.

ISFAP Pilot Implementation

ISFAP Pilot

• The TEUF board has been reconstituted under the new MOI to

govern the ISFAP pilot and the first reconstituted TEUF Board

meeting was held in March with newly appointed directors.

• R138m has been raised from the private sector. All funder

constraints documented and funder engagement model

initiated (communication, advisory board etc..)

• Letters of thanks gone to all donors inviting them to nominate a

person to be part of the donor steering committee. The idea is

to have regular feedback with donors and input.

• The pilot is running live at 7 universities.


ISFAP Pilot …

• 1706 student applications have been gathered, typed into

electronic form, and are now being processed by the banks to

determine household means (administered by Deloitte).

• The student grant/loan/EFC decision policy has been finalized,

together with the allocations to tuition fees, accommodation,

books, food, and stipends.

• Decisions regarding student applications will be completed mid-

March and notifications sent to students before the end of

March

• Application to the National Credit Regulator has been

processed, in order for the pilot to be able to offer loans


ISFAP Pilot …

• The student administration management tool has been scoped

and developed under the leadership and funding of the Michael

Susan Dell Foundation.

• Program managers have been recruited at each pilot site and

training has happened during March.

• TVT college has been removed from 1st phase, to be brought in

later phase (TVT college discussion later in presentation)

• Reviewed the conditions required to offer loans within the pilot

and instructions given (including application to National Credit

Regulator and FSB)

• Engaged with SARS to complete the requirements to offer loans

in the pilot

Agenda

Introduction







PPP feasibility outputs

• Process prescribed by National treasury:

Needs Analysis

Options Analysis

Project Due Diligence

Value Assessment

Economic valuation

Procurement plan

• Thorough understanding of the full lifecyle costs

• Full evaluation of different options and all risks

• Determination of value, affordability and risk transferred to

private sector


PPP feasibility progress

• Parallel to the Pilot a full feasibility study for the new scheme is

being undertaken in line with National Treasury processes.

• Transaction Advisor have been selected and retained in line

with the National Treasury Process

• The ISFAP team have studied the PPP Feasibility process,

including training/guiding workshops from National Treasury

• The PPP Feasibility process has been started, and the team is

working on the first two sections of the report.

• The objective is to complete this by June 2017


• The PPP feasibility study is one of the key inputs that will lead to

the final model to be presented to cabinet:

PPP Feasibility output

ISFAP Pilot findings

Public comment and consultation process

Presidential Task team report and recommendations

Agenda

Introduction







Detailed design and build of Manco / Fundco

• Full team recruited and formed

• Envisaged processes mapped out for application process, and

business requirements developed

• Student lifecycle research completed

• Research underway with stake-holders for the Funding

requirements

• Initial discussions with prospective vendors initiated

• Overall on-plan, next step is to document NSFAS processes,

issues and risks


Funding

• Planning underway to extend the pilot into 2018 identifying types of

funding that can be brought in before full project implemented

• Social Impact Bond team formed including actuarial team seconded

to ISFAP from Discovery

• Social Impact bond initial development paper produced

• Full business modelling developed to incorporate revised decision

matrices

• BBBEE meetings held with the DTI and small task team in place

• SETA meeting held and presentation done to all the CEOs of SETAs

• Donor funding stake-holder engagement set-up through Standard

Bank

• Various funding conversations underway with many entities


Legal

• Negotiated the permission required from DHET, and drafted the

agreement between TEUF and The Maya Group to engage the

Transaction Advisors.

• DHET have asked ISFAP legal workstream to lead and draft the

review of the NSFAS Act which is underway

• Currently finalising student and university contracts for the pilot

Agenda

Key questions raised by the commission

What has been the general response by the Public and the Students to the ISFAP model?

Have there been any drawbacks related to the implementation of the ISFAP pilot?

Have any amendments been made to the ISFAP model?

Have there been proposals to amend the ISFAP model?

If there have been proposals, whether these proposals will be accommodated in the ISFAP model?

Agenda

Introduction







Institutions

• All Universities requested to be part of the pilot

• Universities that were not selected campaigning to be included

• Written feedback from following institutions in support of the

model:

• Stellenbosch

• University of Cape Town

• Wits


Private sector

• Presentations to BASA, BLSA, ASISA all received unanimous

support

• Private institutions donated over R138m to ensure the pilot is

implemented at short notice

• Private institutions donated over R20m in operating costs to

ensure the pilot is implemented at short notice

NSFAS

• NSFAS supplied a comprehensive response and the detailed

information provided will be a valuable resource for the

feasibility study and towards finalising the ISFAP model.


Students

• 1706 applications to ISFAP pilot (from selected courses at

selected Universities) which is oversubscribed with limited

communication to students

• In general all engagements have been overshadowed by the

issues at NSFAS with current 2017 application and distribution

process

• Student engagements with SRC’s have been held but due to the

focus on NSFAS issues ISFAP was not presented

• The distinction between NSFAS and ISFAP hasn’t been made

clear and many people are confused


Students ….

• Disjointed engagement with TVET colleges regarding confusing

communication

• Strong negativity from three main student groups:

Young Communist League

SASCO

Students and individuals at Wits supporting an alternative model

• Negativity stemming from

Philosophy of including the private sector in a solution at all

Trust towards private sector

Whole concept of loans

The proposed solution does not give free education to all


Students …

• Students’ overwhelming call for free education (some call for all

or, some call for the poor) and express unhappiness with NSFAS

• The ISFAP model improves on NSFAS - proposing free education

for the poor and grant/loan support for other financially needy

students

• ISFAP could thus be used as progressing on NSFAS to provide

funding and support for all students in a universal model


Students …

• Students are not a homogeneous group

Most engagements with students are with political student

movements

Most students in TVETs and Universities are likely not to be

politically aligned

Thus engagements with students organisations is usually with the

minority who have political affiliations

General students aren’t organized as well and thus are harder to

engage – also because of them wanting avoid violence and being

victimized

Thus consultations with student political groups may result in

more extreme positions being expressed


Students …

• There is consensus on the participation of the private sector

The concerns are around clarity as to what their participation will

be, how it will be monitored and what the private sector gets out

of their participation

It is seen as an imperative that this involvement does not result in

furthering profits but that it is for the societal good

Government should not be seen to be the only one taking the risk

in the partnership


Media

• The end of 2016 saw no proactive media plan having been

actioned, meaning:

• Most ISFAP communication was reactionary & driven mainly

by media queries

• An inability to drive the message and position the PPP as

positively as could be done via proactive media engagement


Media

• There was a communication tactic change in 2017, with active

media engagements being driven by ISFAP & this resulted in:

• An increase in both actual coverage numbers, plus an

improvement in the sentiment

• An ability to flesh out issues and have an indication of which

media platforms and engagements derived what results

• Traditional media (print, broadcast & online) proved to be

where ISFAP generates the most positive coverage, as the

communication message on these platforms is driven by

ISFAP, versus by external commentators


Media

• The proactive stance taken on communication in 2017 has

begun to see results:

• January: Mainstream Media Coverage

− 54 media articles on ISFAP

− 28% of these had a negative sentiment (driven mainly by print) & 15%

were positive (mainly online)

− Media platform split: print (33%) online (46%) broadcast (20%)

• February: Mainstream Media Coverage

− 57 media articles on ISFAP

− 26% of these were positive (driven mainly by print & online) & in a

great contrast to January, there were no negative articles

− Media platform split: print (47%) online (46%) broadcast (7%)


Media

• The key/popular issues that emerged from the media coverage

were the following:

− ISFAP being viewed as NSFAS 2.0 (this was one of the trending

topics on social media in February)

− ISFAP as a debt trap for students & representing the

corporatisation of higher education

− SARS will become the equivalent of a loan shark for the private

sector

− ISFAP is the possible solution to ending the conflict at campuses

− The model will help expand access to higher education

− Business is coming to the party


Public commentary process

• Only 17 responses received in original commentary process

that closed at the end of January. Public process has been re-

opened until the end of April and comments are being collated.

• Of the 17 responses the following were not included in the

review:

4 submissions were unsolicited invitations from service providers

1 submission was a request for examination results from a TVET

student

1 submission was a request for funding from a university students


Responses received:

No Name/Organisation

1 ETDP SETA

2 NSFAS

3 NRF

4 [email protected]

5 [email protected]

6 [email protected]

7 Prof Daya Reddy, Acting Deputy Vice-Chancellor, UCT

8 Stellenbosch University

9 Business Unity South Africa

10 Western Cape Education Department

11 Durban University of Technology, [email protected]

mailto:[email protected]






Public commentary process

• Stellenbosch University strongly supported the report and

recommendations, and no specific critical statements or

suggestions were made.

• Western Cape Education Department strongly supported the

report and recommendations, and no specific critical

statements or suggestions were made.

• NSFAS supplied a comprehensive response and the detailed

information provided will be a valuable resource for the

feasibility study and towards finalising the ISFAP model.


Public commentary process ….

• Individual submissions from Kaya Sithole and Dylan Barry were

both very negative toward the whole ISFAP model in concept

• NRF, UCT, ETDP SETA, BUSA and DUT all gave generally

supporting comments, together with some critical statements

• It must be noted that in the development of the new model

and through the PPP feasibility process the tenets of the

Promotion of Administration of Justice Act (PAJA) will be

adhered to. All affected and interested parties must be

consulted before the finalisation of the model for the scheme

and the PPP

Agenda

Introduction







Environment

• NSFAS issues

Confused communication

Engagements focused on NSFAS issues

• Student unrest

Issues at TVET colleges mainly

• Impact has been to delay the processing and communication:

Applications being processed in March

Decision only being communicated to students in April

(already enrolled in education system)


Legal

• Requirement to apply to FSB and NCR for licence to grant loans

• Application process will extend into the start of the pilot

• Impact: Loans will only be offered later in the year as top up to

initial grant (to households earning 450k-600k)


TVET colleges

• Failed engagement model with Orbit college, after 6 months

couldn’t obtain information needed relating to:

– Total cost of study

– Throughput rates

– Courses

• Concept of ISFAP is to:

– Fund more students (missing middle)

– Successfully fund (total cost of study) and offer support to

increase graduation rates


TVET colleges

• Key reasoning applied to University students and application of

ISFAP:

– University courses are desired / supported by the private sector

– ISFAP approach is to fund and support these students, creating

more graduates by reaching out to the private sector as they

desire/support this product

• Private businesses do not desire/ support the NCV’s or Report 191’s

programmes at this stage. TVET branch strategy is to introduce mote

Occupational Programs into TVET Colleges.

• Impact: TVET college pilot delayed. Way forward is to phase the

funding and support components of ISFAP into TVET colleges in line

with the TVET branch development strategy

Agenda

Introduction







• The following key areas of the ISFAP model have been refined

and amended over the last three months:

• Expected Family Contribution and Decision Matrix - detailed

matrix developed

• Development of process to obtain household means

• Development of funder requirements (constraints to be

applied and reporting)

• Set-up of Donor Committee

• The scope of funding is being amended and developed (B-

BBEE and SETA’s)


• Development underway according to input received:

• Phasing / Incorporation of TVET colleges in ISFAP

• Social Impact Bond

• Social repayment of ISFAP support (active citizenry)

• Funding support and requirements from B-BBEE and SETA

sources

Agenda

Introduction







• Proposals from external finance companies:

• Separate the Loan and Grant contracting institutions within

the model to increase focus and repayment ability

• Proposals from the Social Impact and Funding modelling team

• Detailed structuring of the Social Impact Bond

• Repayments to funding could be structured as a tax rather

than individual loan repayment

• Social repayment of grants – active citizenry mentorship to

future students


• Proposals from the public commentary process include (but not

limited to):

− Control/minimisation of all/any profits generated by the private

sector

− Suggestions regarding the operational role/components still to be

performed by NSFAS

− Broaden the scope past occupations of high demand

− Incorporate post graduate studies in the program

− Ensure solution is scaled to the White paper requirements

− Align the decision making process and timing of such to the

institution decision and registration process

− Sub-commission to investigate student non financial support

requirements

− Clarification and extension of some unclear areas of the report

Agenda

Introduction







• The ISFAP model is continually being developed:

− Through the development of the Public Private Partnership

Feasibility process

− Through the experience gained from the pilot

− Though stake-holder engagement

− Through documenting the experience and issues at NSFAS

• All proposals will be evaluated by the project steering

committee and incorporated when agreed

• The development of the final model will occur through a

process of progressive elaboration – taking into consideration

the outcomes of the feasibility study, what is learnt from the

Pilot, the public comments and consultation process.


• Key proposals that are likely to be incorporated:

− Separate the Loan and Grant contracting institutions within the

model to increase focus and repayment ability

− Control of all/any profits generated to be mandated and managed

within the PPP agreement

− Final solution will not only focus on occupations in high demand

but also cover general formative degrees, funder constraints may

focus their funding on certain degrees

− Timing of decision and distribution process must be aligned with

Institutions timing of decisions and registration

− Details around the NSFAS operating model will be explored in

forthcoming workshops


• Commitment to develop a model that works for all stake-

holders incorporating all points where possible, being cognisant

of significant negativity from student representatives towards

loans and the incorporation of the private sector, whilst still

pursuing alternative funding sources as defined by the mandate,

within the fiscus constraints as described by National Treasury

• Key workshops coming up:

• Workshop with DHET/NSFAS to determine operational requirements from

NSFAS and what will be procured from ISFAP through the PPP agreement

• Workshop with TVET branch to document he TVET branch strategy and

produce phased plan of ISFAP to run alongside this


• Key broad principles of ISFAP remain unchanged but constantly

challenged:

• Public / Private Partnership

• Additional funding sourced from all sectors, and particularly

the private sector

• Loan and grant model determined by household income

• Progressive support offered to the poor

• Total cost of study and student wrap around to increase

graduation and throughput

• Key input into the development of a funding solution is the

outcome of the Presidential Fee’s Commission

Thank You

69

Documents

Department of Higher Education and Training - Justice … · ISFAP Pilot implementation ... • The Department of Higher Education and Training ... MTT Chair presented the ISFAP blue