SARS applies brakes to varsity loans’ free ride

YESTERDAY this newspaper carried two disturbing reports on the front page. The first was about an alleged “fire pool” at former president Nelson Mandela’s Qunu home. The second was on a deadly assault in a Tsolo village that took place with members of the community, seemingly, as an audience. The common thread is the police. In the “fire pool” story three members of Madiba’s family – his daughter Makaziwe Mandela and his grandchildren Ndaba and Ndileka Mandela – all rubbished claims by Police Minister Nathi Nhleko that a “fire pool” existed at Qunu. They were emphatic it was “an ordinary swimming pool”. They also noted it was “not built by the government”.

What an utterly misguided comparison for Nhleko to even try to make. And how foolish to once again highlight the massive difference between the extent and the costs of the security upgrades at Nkandla (R260million and rising) and at Qunu (R28.2-million, for electrified palisade fencing, an elevator, a guardhouse, automatic gates, security cameras and an alarm system).

Moving beyond the spectacle of Nhleko willingly reducing himself to a buffoon in the eyes of all, it is important to consider what happens when a nation is forced to watch its national police minister twist the truth and fawn around his master in a way that completely negates everything his position is meant to represent.

In one sense, ordinary citizens find themselves cast into a situation not too dissimilar to that of the innocent community members at Tsolo.

They, too, are the captive audience of a gruesome murder.

But when the cause is the defence of Nkandla, it is not a trussed-up man that we must watch being brutally bludgeoned. Rather, Law and Order is the victim and those wielding the whips are the people who would call themselves our leaders.

But actually the really big problem for the broader community comes once the whipping ends and the body lies limp and bloody on the ground.

Who then do the people turn to when they need the help or the protection of Law and Order? A battered, lifeless limb? Does Nhleko not grasp the fact that in twisting the truth and making himself a fool in a sham defence of the indefensible, he is undermining all that the police service is supposed to stand for? And in turn, ironically, he is doing himself in?

Our intention here is not to excuse what happened at Tsolo. It was murderous and barbaric and the perpetrators must be brought to book. But so, too, must those responsible for Nkandla. Failing which, who do ordinary citizens invest their faith in?

A lastly, why is our police minister trawling around press clubs like a self-appointed PRO for Nkandla? Why is he not consumed by the massive and seemingly intractable problems afflicting the police service?

Has he perhaps not heard of Marikana?

IN A bid to arrest its declining rate of loan recovery, the National Student Financial Aid Scheme ( NSFAS ) has approached the SA Revenue Service (SARS) to help track down debtors.

SARS says it has tracked down 100 000 beneficiaries who are working and who owe a total of R13-billion in outstanding loan repayments, and the NSFAS executive is approaching businesses that employ these debtors.

The choice on offer is for the NSFAS to dock debtor salaries or for companies to buy back their employees’ student debts.

The R13-billion that has been traced in the past few months is more than the R9billion that the NSFAS had available to distribute in loans and bursaries this financial year.

But members of parliament say the fund’s loan recovery rate has declined dramatically in the past few years.

In the 2013/2014 financial year, for example, it recovered R600-million but this financial year it aims to collect only R373-million.

This represents a recovery rate of less than 30% – one of the lowest in the world for similar funds.

The best-performing financial aid schemes globally usually have recovery rates of 60%-70%.

The Financial & Fiscal Commission has warned that the NSFAS budget is only enough to help about 50% of students who should qualify for financial assistance.

It has called on government to help fulfil the National Development Plan’s objective to increase university student enrolment from 950 000 in 2014 to 1,07million in 2019. The plan is to increase enrolment at technical colleges from 750 000 to four million by 2030.

The NSFAS executive assured parliament’s select committee on education and recreation last month that it has a plan to improve collection rates by 10% a year, but members of the National Council of Provinces who sit on this committee have raised concerns.

They fear that the fund’s inefficiency, coupled with the fact that national treasury has made it clear that there will be no significant NSFAS budget increases, means fewer students have been able to benefit each year.

This is fuelling student protests as well as opposition to the ANC.

“You have more problems than you think,” the acting chair of the committee, Catherine Dlamini (ANC), told the scheme’s executive.

NSFAS CEO Msulwa Daca explained to MPs how the issue of historical debt was more complex to resolve than simply improving loan recovery rates. When students apply for financial assistance they are subjected to a means test which determines the expected family contribution.

If, for example, this contribution is R10 000/year, the scheme will provide the remaining R50 000.

If the beneficiary passes the first year of study, 40% of the loan for that year is converted to a bursary.

The same happens every year until the final year.

If the beneficiary passes and qualifies in the last year of study the entire loan for that year is converted to a bursary.

Interest on the final amount (for the years leading up to the final year) kicks in only a year after the beneficiary starts working and is required to start paying the loan back.

MPs say the scheme is not discerning enough about the courses it funds.

It should prioritise students who will qualify with skills that the economy needs and that will assure them employment.

Tracking down students after they finish studying or drop out is difficult. But Daca says the system of financing poor students is made more complicated when families fail to come up with the contributions they are supposed to make, saying that they can’t afford it. This means the scheme has to make unplanned increases to its contribution.

“Once you fully fund a person, the total number of students you can fund shrinks,” says Daca, who also admits that there are two key weak points in the loan system.

The first is the means test applied to determine who is a deserving beneficiary. In the past, all the student had to do to prove that the income information provided was accurate was supply an affidavit.

“We now know that those [affidavits] are not worth the paper they are written on,” says Daca, who was CFO of NSFAS before becoming CEO.

He is confident, however, that the new means test system being introduced will ensure that only the truly needy benefit.

This new means testing will link into the social security system to confirm whether the applicants were beneficiaries of a child grant. It will also link into the department of education’s database to establish what school applicants attended and what fees were paid.

“We will be able to compare students who were at no-fee schools and those whose families were paying fees. We are trying to bring in a whole lot of databases to build a profile of a student. No database can tell the truth on its own,” says Daca.

He believes that the unabridged birth certificates that the department of home affairs now requires children to have will help verify students’ parents and offer a better picture of the family income.

The NSFAS is also phasing out the other weak point – the funding model of giving loan and bursary money to universities and colleges at the beginning of the year and leaving these institutions to distribute it.

This money is not ring-fenced, which allows many universities and colleges to use the cash to keep their own debtors from the door. This means there are insufficient funds for NSFAS beneficiaries when they arrive to start a new year.

The new model is designed to bypass tertiary education institutions so that the scheme disburses money to and interacts more directly with students.

SARS has tracked down 100 000 NSFAS beneficiaries who are working and who owe a total of R13-billion in outstanding loan repayments

Troye Lund writes for the Financial Mail where this article appeared first