Why Sizwe Nxasana quit student aid scheme
The financial-aid logjam in higher education can be resolved by better management. But growing the economy to make the policy affordable is going to be far more difficult
The resignation of corporate heavyweight Sizwe Nxasana as chair of the National Student Financial Aid Scheme (NSFAS) and the government decision to place it under administration is a textbook case of how not to manage policy change.
Former president Jacob Zuma’s announcement on December 16 that higher education would, from 2018, be free for all qualifying poor students came like a bolt from the blue.
With just weeks to go before the start of the academic year, NSFAS had to gear up to handle a deluge of applications, which surged to more than 600,000 against the usual 400,000. And then it had to wait until April to get the required funding.
It would have been a tall order for an efficient, respected institution to manage the situation — but NSFAS was neither.
Operationally, it had a new CEO in Steven Zwane. He was still bedding down the change, made in 2016, from a system in which the 26 universities administered their own financial aid to one that centralised everything under NSFAS.
Former University of the Free State rector Jonathan Jansen describes NSFAS as "a monstrosity", beset by ongoing inefficiencies and lacking credibility, having amassed R20bn in outstanding loan repayments over many years.
Given NSFAS’s lack of capacity and credibility, it was a "massive blunder" to centralise all financial aid under its control in 2016, says Jansen. "To think it could take the whole R21bn [free-fees system] on its own shoulders was madness."
Nxasana, a former FirstRand CEO, thinks NSFAS "actually did quite well under the circumstances", bearing in mind it was administering two systems at once: a loan-recovery system for former students, and a bursary or grant system for new, fee-free students.
NSFAS says it has processed more than 600,000 applications and approved aid for 478,580 new and returning students who meet the criteria. Roughly 370,000 of these approved students have been paid out, but the long delays in disbursing student allowances have given rise to horror stories about students going hungry, being forced to live in squalor and facing eviction.
According to Nxasana, the payment backlog mainly concerns students who have failed to sign their new NSFAS bursary agreements.
The bursary agreements, which replace the previous NSFAS loan agreements, are a source of much unhappiness. Some students have balked at the fact that the no-strings promise of free education has been reduced to a bursary, complete with terms and conditions and, in some cases, stricter performance requirements than before.
For instance, under the old agreement students could continue to qualify for NSFAS funding if they completed their university degrees within the regulated time plus two years (N+2). This has been reduced to N+1 because the new package is much more generous, covering almost the full cost of funding, including books, materials, transport, accommodation and fees.
Part of the delay in paying students their allowances was caused by the absence of any policy detail in Zuma’s December 16 announcement. It took until mid-May for the government to decide on, cost and approve the terms of the new package.
Various stakeholders were involved. For instance, universities had to develop benchmarks for on-campus or university-accredited accommodation; NSFAS had to develop benchmarks for meals; the department of higher education & training had to develop travel benchmarks; and all these benchmarks, which were fundamentally different from the previous policy, had to be costed by the National Treasury.
"This was clearly a textbook case of how not to manage policy change," says former University of Johannesburg vice-chancellor Ihron Rensburg. "[The announcement of fee-free education] was clearly a desperate political act by Jacob Zuma devoid of any understanding of the complexity of implementing and funding that policy."
If the government learns anything from the debacle, it should be that precipitous policy changes should not be announced unless critical institutions have the funding and capacity to implement them.
But instead of blaming the government for mishandling the issue, NSFAS has borne the brunt of students’ anger, leading to good people like Nxasana being pilloried.
It is utterly unfair of students and unions to dismiss NSFAS as a failed organisation, given the contextIhron Rensburg
Last week, student organisations warned of more national protests at higher education institutions, while the National Education, Health & Allied Workers’ Union repeated its demand that Zwane step down.
"It is utterly unfair of students and unions to dismiss NSFAS as a failed organisation, given the context," says Rensburg.
"Their complaints are being laid at the wrong door. They should’ve been laid at the door of the state."
After months of trying to make the system work, Nxasana has resigned, describing the situation as "very demanding and complex", and the pressure as "relentless".
"You’re dealing with students who’re impatient and policy that isn’t very clear and you have to make do," he says.
"I was very happy to do it for three years but I’m exhausted, to be honest."
Higher education minister Naledi Pandor will now dissolve the board, appoint an administrator and initiate a review of NSFAS processes — a rather sweeping political gesture given that many of the problems are policy related and were not of NSFAS’s making.
Nxasana believes five main issues need to be addressed:
• Dealing with the fact that the student activist cohort behind the Fees Must Fall protests now receive less generous allowances than the first-year, fee-free students, and getting students to accept that free education comes with responsibilities and conditions, including passing one’s exams;
• Deciding whether to decentralise the administration of financial aid again to allow well-capacitated universities and technical & vocational education & training (TVET) colleges to do it themselves;
• Deciding whether NSFAS should administer allowances for TVET colleges;
• Resolving the data exchange and integration challenges between NSFAS, universities and TVET colleges; and
• Ensuring that NSFAS meets the economy’s demand for specific skills, rather than funding students to undertake degrees for which there are no job opportunities.
What it means
Without the budget and capacity NSFAS never really stood a chance in administering a fee-free system
Both Jansen and Rensburg think the solution is to allow the universities, which have the administrative capacity, to go back to managing financial aid themselves. NSFAS should look after the remaining institutions, especially the 50 TVET colleges, but ensure that their capacity is built up over time so that it can be reduced to playing a supervisory role.
For Jansen, there are two caveats.
First, all institutions must have watertight provisions for dealing with corruption: unless the system is efficient and properly governed it will be impossible to win back students’ trust.
(Who can forget the case of the Eastern Cape university student who received R14m from NSFAS in her personal bank account and went on a shopping spree?)
Second, the economy has to grow, otherwise it will be impossible to fund free education sustainably.
In all the finger pointing over Nxasana’s resignation, this latter issue — arguably the most important — has been completely forgotten.