UPDATE ON THE COMPREHENSIVE STUDENT FUNDING MODEL

Transcript:UPDATE ON THE COMPREHENSIVE STUDENT FUNDING MODEL:
UPDATE ON THE COMPREHENSIVE STUDENT FUNDING MODEL PHASE 1 Presentation to the Portfolio Committee on Higher Education and Training 20 AUGUST 2024 BACKGROUND A Ministerial Task Team (MTT) was appointed in June 2021 to support the DHET and National Treasury to configure a new student financial funding model for the higher education and training sector and 18 recommendations were tabled to Cabinet in June 2022 and three options were proposed: Option 1 (Status Quo) - Government fully subsidised model for poor. Option 2 (Hybrid) - Combination of a loan/bursary model that uses income thresholds to determine for which financial instrument a student qualifies. This model would explore different loan models, including a direct lending model (2a), wholesale lending model (2b) and credit guarantees (2c). Option 3 (Modified Status Quo) - fully subsidised model with a range of controls that limit the number of students funded MTT supported Option 2 favouring a wholesale lending model (loan scheme supported by public and private funds) SECRET 2 The MTT explored three high level policy models, supported by financial models, to guide the decision-making about its final recommendations. Option 1 (Status Quo) models the funding requirement if Government continues with the fully subsidised model. As a result of additional funding made available to NSFAS in the 2022/23 MTEF, expenditure matches funding. Option 2 (Hybrid) estimates the use of a combined loan/bursary model that uses income thresholds to determine for which financial instrument a student qualifies. Different loan models are explored in the models, including a direct lending model, wholesale lending model and credit guarantees. Option 3 (Modified Status Quo) models the fully subsidised model but with a range of controls that limit the number of students funded and focus on efficiency. This option estimates the implications of higher course pass rates, capped accommodation allowances, constrained growth in other allowances, and slower than inflation increases. Option 2 is the option being explored BACKGROUND (2) MODEL OUTCOMES SECRET 4 Option 2 Hybrid Scheme OPTION 2 – HYBRID SCHEME – LOAN MODELS Depending on the split between government and the private sector, the contribution of government ranges from R31.6 billion to R42.1 billion over a ten-year period SECRET 5 Diagrammatic Representation of Option 2 6 THE LOAN SCHEME GUIDELINES TVET and University (public) students. Undergraduate or postgraduate students 70% resident in STEM programmes. (NSFAS Bursary is 40%) 30% resident in Humanities programmes. Approximately 47% of missing students