Business commits R200m to pilot funding project for students
Business will contribute R200m towards piloting the Ikusasa Student Financial Aid Programme (Isfap) this year — a public-private partnership led by former FirstRand CEO Sizwe Nxasana, which seeks to address the funding requirements of disadvantaged students.
The pilot will cover the full cost of study for the 2017 academic year, including tuition and accommodation, for 1,500 students at seven universities and one Technical Vocational Education and Training (TVET) college.
If the pilot is successful, the plan is to get corporates to contribute 1.5% of their payroll bill to Isfap come 2018, which would raise an estimated R24bn per year to fund higher education and training.
In terms of broad-based black economic empowerment (BBBEE) legislation, businesses must spend 6% of payroll on skills development.
Companies often found this to be too large an amount of money to spend only on their own employees, said Trevor Chandler, senior policy adviser at the Association for Savings and Investment SA (Asisa).
"Some of this spend could be diverted towards the Isfap initiative," Chandler said on Tuesday.
The funding model would address the "missing middle", providing for families earning less than R600,000 per year.
Students looking to train in occupations and skills in high demand would be financed at full cost, including tuition, accommodation and a stipend, Asisa CEO Leon Campher said.
The programme would also provide a support structure to these students, including mentorship and internship opportunities, he said.
Students at the top end of the income band would probably have only their first year funded, Campher said. "The idea is that Isfap will issue social impact bonds to the savings industry and in that way raise money to provide loans to these students to complete their studies," he said.
The loans would not accrue interest while the individual was still studying. Students would start to repay these loans one year after they had started working at "soft commercial interest rates", Campher said.
It had not yet been decided who would guarantee these bonds, but it was possible that Isfap’s own balance sheet could create a backing, Chandler said.
Isfap would not replace the National Student Financial Aid Scheme (Nsfas), he said.
The pilot would test the feasibility of the programme for a full roll out in 2018, Campher said. "It’s a bold move and we all hold thumbs that it works."
Isfap will be officially launched on Thursday.