NSFAS is a public entity and is governed as such by the NSFAS Act and the Public Finance Management Act (PFMA) and regulated by the PFMA and Treasury Regulations. Chapter Six of the PFMA and Part 9 of the Treasury Regulations include: requirements regarding the responsibilities of accounting authorities of public entities, budgets, annual reports, internal controls, strategic planning, cash management, investment policy and audit committees.
- NSFAS Act
- Higher Education Act
- Public Finance Management Act
- National Credit Act
- Constitutional of the Republic of South Africa
- Ministry of Higher Education and Training
- Portfolio Committee on Higher Education and Training
- Select Committee of Education and Recreation
NSFAS was established according to the National Student Financial Aid Scheme Act (Act 56 of 1999) and incorporated TEFSA (Tertiary Education Fund of South Africa). From 1993 to 2000, TEFSA was the primary non-profit company in terms of Section 21 of the Companies Act and ceased to operate in July 2000. All existing loans on the TEFSA books were transferred to NSFAS.
The NSFAS Act enables any student to apply for a loan or bursary from NSFAS, but allows the board to impose conditions, generally, or in respect of a particular loan or bursary. Such conditions include the use of the means test and the loan conversion of up to 40 percent of any loan as incentive for academic success.
It provides for payment by NSFAS of the amount of the loan or bursary “to the designated higher education institution”, rather than to the applicant. It also allows NSFAS to enter into what is in effect an agency agreement with higher education institutions (HEIs) or further education and training (FET) colleges, in terms of which they are authorized to:
- Administer loans and bursaries granted to students of the institution.
- Receive loan and bursary applications from students.
- Consider and assess the applications in light of the criteria for the granting of loans and bursaries determined by NSFAS.
- Grant loans and bursaries if the criteria are met after ascertaining that funds are available.
- Enter into a written agreement with a borrower or bursar in accordance with the provisions of the Act and on the terms and conditions determined by NSFAS.
The Act requires NSFAS to “recover loans” as one of its fundamental functions and provides instruments not typically available to public or private entities to enable it to do so. These include:
- Access the South African Revenue Service (SARS) database to trace borrowers and establish the employment status and income level of borrowers.
- An effective right by NSFAS to issue extra-judicial garnishee orders to the employers of borrowers to enforce deduction of repayment instalments.
- It requires borrowers, who are no longer studying to inform NSFAS periodically of their employment status, income level and residential addresses and other contact details.
- It creates penalties for debtors, who fail to adhere to these requirements.
Higher Education Act
The government conceptualized NSFAS as a loan and bursary scheme in order to address the rising student debt problem in higher education institutions (HEIs) and to give effect to the government’s commitment to redressing the inequities of the past.
The Republic of South Africa (1997) Higher Education Act, No. 101 of 1997 aims to:
- Regulate higher education
- Provide for the establishment, composition and functions of a Council on Higher Education;
- Provide for the establishment, governance and funding of public higher education institutions;
- Provide for the appointment and functions of an independent assessor;
- Provide for the registration of private higher education institutions;
- Provide for quality assurance and quality promotion in higher education;
- Provide for transitional arrangements and the repeal of certain laws; and to provide for matters connected therewith.
Public Finance Management Act
As a public entity, NSFAS is also subject to the Public Finance Management Act (PFMA), Act 1 of 1999, in terms of which NSFAS is listed as a Schedule 3A entity.
The NSFAS Act specifies that the board must manage, govern and administer NSFAS. The Act requires the board to establish a five-member board executive committee and a board finance committee.
NSFAS is listed as a Schedule 3A national public entity in terms of the PFMA. These entities are extensions of a department with the mandate to fulfil a specific economic or social responsibility of government. Boards of public entities have considerable fiduciary responsibility including the “reasonable protection of the assets and records of the public entity” and prevention of “any prejudice to the financial interests of the state”.
National Credit Act
NSFAS is subject to the National Credit Act (NCA) (Act 34 of 2005), which requires all credit providers to register with the National Credit Regulator (NCR). The NCA prevails over all other legislation dealing with the provision of credit. NSFAS is registered as a credit provider under registration number NCRP 2655.
Constitutional of the Republic of South Africa
The bill of rights of the Constitution of the Republic of South Africa Act (108 Of 1996), states in Section 29 (1) (a): “Everyone has the right … to a basic education, including adult basic education; and to further education, which the state, through reasonable measures, must make progressively available and accessible.”
Ministry of Higher Education and Training
The vision of the Ministry of Higher Education and Training to have for a South Africa in which there is a differentiated and fully-inclusive higher education system that allows South Africans to access relevant post-school education and training, in order to fulfil the economic and social goals of participation in an inclusive economy and society.
The mission of the Department of Higher Education and Training is to develop capable, well-educated and skilled South Africans who are able to compete in a sustainable, diversified and knowledge-intensive international economy, which meets the development goals of the country. The department aims to achieve this mission by reducing the skills bottlenecks, especially in priority and scarce skills areas, improving low participation rates in the higher education system , correcting distributions in the shape, size and distribution of access to higher education and training and improving the quality and efficiency in the system, its sub-systems and institutions.
Portfolio Committee on Higher Education and Training
The Portfolio Committee on Higher Education and Training is established by the rules of the National Assembly as enshrined in Section 57(2) (a) of the Constitution of the Republic of South Africa, (Act 108 of 1996), which stipulates that the rules and orders of the National Assembly must provide for the establishment, composition, powers, functions, procedures, and duration of its committees. The Committee is therefore an extension of the National Assembly and derives its mandate from Parliament. The functions of the Portfolio Committee as enshrined in Rule 201 of the 8th edition of the Rules of the National Assembly state that:
1. A Portfolio Committee -
(a) Must deal with bills and other matters falling within the Post-School Education and Training sector as are referred to it in terms of the Constitution, legislation, these Rules, the Joint Rules of by resolution of the Assembly;
(b) Must maintain oversight of:
(i) The exercise within its portfolio of national executive authority, including the implementation of legislation;
(ii) Any constitutional institution falling with its portfolio;
(iii) Any executive organ of State falling within its portfolio; and
(iv) Any other body or institution in respect of which oversight was assigned to it;
(c) May monitor, investigate, enquire into and make recommendations concerning any such executive organ of state, constitutional institutions or other body or institution, including the legislative programme, budget, rationalisation, restructuring, functioning, organization, structure, staff and policies of such organ of state, institution or other body or institutions;
(d) May consult and liaise with any executive organ of State or constitutional institution; and
(e) Must perform any other functions, tasks or duties assigned to it in terms of the Constitution, legislation, these Rules, the Joint Rules or resolutions of the Assembly, including functions, tasks and duties concerning parliamentary oversight or supervision of such executive organs of state, constitutional institutions or other bodies or institutions.
Select Committee of Education and Recreation
The Select Committee on Education and Recreation is a Committee of the National Council of Provinces (NCOP). Functions of this committee amongst others are to monitor the financial and non-financial performance of government departments and their entities to ensure that national objectives are met.
The mandate of the committee amongst others is to:
- Process and pass legislation.
- Facilitate public participation in Parliament relating to issues of oversight and legislation.
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