Support and Funding Model for Poor and Missing Middle students Presentation by ISFAP Task Team

Introduction o The Ministerial Task Team (MTT) completed its report on a financial aid and support model for poor and missing middle students o On the 2nd November the MTT presented its Report to the Cabinet and gained government support for the following: Cabinet noted the ISFAP blueprint Cabinet approved that the MTT Report be published in the Government Gazette for public comment Cabinet approved that the ISFAP pilot would go ahead to test certain aspects of the proposal at selected universities and one TVET College Cabinet approved that parallel to the Pilot a full feasibility of the ISFAP PPP in line with National Treasury regulations should go ahead o The Department of Higher Education and Training (DHET) and the MTT Chair presented the ISFAP blue print to the Presidential Inquiry into Higher Education and Training on the 21st November 2016.

Introduction o Since receiving Cabinet approval, various components and work streams have been established and are progressing well: ISFAP steering committee Pilot implementation to test certain aspects of the model PPP feasibility study Detailed design and build of manco/fundco Funding work stream that includes: Overall direction and funding lines (commercial etc..) Social impact bonds to fund student wrap around support BBBEE skills development SETA s Business/portfolio modelling and interface with National Treasury Legal o A Project steering committee (steerco) has been established; includes the DHET, National Treasury, ISFAP Pilot team and MTT members. Chaired by Sizwe Nxasana

Introduction o Steerco oversees the implementation of the Pilot and the feasibility study and manages all processes towards the final model that will be taken through to Cabinet for approval (aim for September 2017) o A full schedule of meetings has been diarized until July: 12 weekly TEUF board meetings (including ISFAP pilot) 6 weekly overall project steerco 3 weekly project management weekly pilot management o The high level project plan taking ISFAP through to cabinet sign-off has been developed. ISFAP operational and funding budgets prepared and documented

Governance & Operating Structure Minister specifies governance structure and rules and criteria

Student Introduction Support Oversight & admin Verification of students & information Admin systems & processes Continuous monitoring, preventative action, remedial steps, student support

ISFAP Sources of Funding

Student Funding Policy Decisions o The following Policy Decisions have been devised and implemented in the ISFAP pilot: Maximum Loan Expected Family Contribution by Household Means Loan / Grant ratio by Household means Total Cost of Study o Maximum Loan has been calculated on the duration of the course relating to average expected salaries, this has capped the loans, and restricted where they can be offered o Expected family contribution has been set at R0 for households whose income is less than R300k, 10% of total cost of study for household income R300k R450k, and 18% of total cost of study for household income R450k-R600k

Loan & Grand Decision Matrix 4 year qualification

Student Funding Policy Decisions o For business modelling purposes the Total Cost of Study has been calculated referencing the information contained in the March GTAC performance review of NSFAS, giving an average Total Cost of Study of R92k o Within the pilot the total cost of study has been supplied by the institutions directly (higher than average due to courses and institutions in pilot) and for a 4 year course (accounting) is R135k made up of the following: tuition fees R53,000 accommodation R40,000 meals R20,000 books living allowance calculator / laptop R6000 R7500 R8500 (only in 1 st year)

ISFAP Pilot 2017: Structure

ISFAP Pilot 2017: Governance & Reporting SAICA BOARD SAICA AUDIT COMMITTEE SAICA FINANCE COMMITTEE DIRECTORS TEUF Sizwe Nxasana CEO: Sifiso Group Ajen Sita CEO: Ernst & Young Lwazi Bam CEO: Deloitte Terence Nombembe CEO: SAICA Dion Shango CEO: PwC Sandile Zungu CEO: Zico Investments Thabo Dloti CEO: Liberty ZC Nevhutalu Trustee: FirstRand Foundation

ISFAP Pilot 2017: Operational Costs R6,5 million - Project Managers - Data analyst - Administrator Michael & Susan Dell Foundation R24,5 million R6 million - Software R12 million - TVET college research FirstRand Foundation R14,8 million - PPP feasibility study - Online platforms build - Detail design team SAICA Discovery WebberWentzel Chorus Call R3,71 million - Legal - Seconded staff The Saville Foundation R1,8 million - Educational specialist

ISFAP Pilot 2017: Implementation Goals of the ISFAP Pilot (test areas of ISFAP): o Selection process (specific areas of this only) Household means test Universities list for selected courses Academic / behavioural strength of student Focus on professions in high demand, some general formative degrees, and artisans; and Use of the NBT test (selection into professional programmes) o Contracting and disbursements o Structure University partnerships o Private sector grant capital raising o Design of appropriate student support o Determination of Social Impact Bond (SIB) o Application of funder constraints o Administrative requirements

ISFAP Pilot 2017: Implementation o The TEUF board has been reconstituted under the new MOI to govern the ISFAP pilot and the first reconstituted TEUF Board meeting was held in March with newly appointed directors. o R138m has been raised from the private sector. All funder constraints documented and funder engagement model initiated (communication, advisory board etc..) o Letters of thanks gone to all donors inviting them to nominate a person to be part of the donor steering committee. The idea is to have regular feedback with donors and input. o The pilot is running live at 7 universities. o 1706 student applications have been gathered, typed into electronic form, and are now being processed by the banks to determine household means (administered by Deloitte). o The student grant/loan/efc decision policy has been finalized, together with the allocations to tuition fees, accommodation, books, food, and stipends.

ISFAP Pilot 2017: Implementation o Decisions regarding student applications will be completed mid-march and notifications sent to students before the end of March o Application to the National Credit Regulator has been processed, in order for the pilot to be able to offer loans o The student administration management tool has been scoped and developed under the leadership and funding of the Michael Susan Dell Foundation. o Program managers have been recruited at each pilot site and training has happened during March. o TVT college has been removed from 1 st phase, to be brought in later phase (TVT college discussion later in presentation) o Reviewed the conditions required to offer loans within the pilot and instructions given (including application to National Credit Regulator and FSB) o Engaged with SARS to complete the requirements to offer loans in the pilot

ISFAP Pilot 2017: Agreed Student Distribution Universities University Venda of Walter Sisulu University Medical doctors Pharmacists Actuaries Engineers Chartered Accountants Prosthetists/ Physiotherapists Humanities (selected majors) 40 20 20 20 General Formative Degrees University of the Witwatersrand University of Cape Town University Pretoria of Tshwane University of Technology 100 80 120 90 20 10 20 10 100 20 100 100 50 University of KwaZulu - Natal 50 20 10 Total 290 20 110 240 140 70 40 90

ISFAP Pilot: R138m Raised DONOR AMOUNT A T C SA WIRELESS INFRASTRUCTURE (PTY) LTD 200,000.00 MERCANTILE BANK 200,000.00 ABSA FOUNDATION TRUST 10,000,000.00 HOLLARD 2,000,000.00 CAPITEC BANK LTD 300,000.00 FNB FOUNDATION 40,000,000.00 INVESTEC 4,000,000.00 LIBERTY 1,000,000.00 JSE COMPENSATION COMMISSIONER 17,000,000.00 SASOL SOCIAL INVESTMENT 3,000,000.00 MMI HOLDINGS STANDARD BANK OF S A 25,000,000.00 ANGLO AMERICAN OPPENHEIMER FAMILY TRUST IDC 2,000,000.00 CHINA CONSTRUCTION BANK 1,000,000.00 LONMIN ANGLOGOLDASHANTI 306,250.00 NEDBANK 3,000,000.00 ALLAN GRAY PTY LIMITED 20,000,000.00 DISCOVERY MONDI GROUP 1,000,000.00 SAPPI SOUTHERN AFRICA LIMITED 1,000,000.00 SAFIKA HOLDINGS 250,000.00 VOLKSWAGEN OF SA PTY LTD 1,000,000.00 ASISA 2,200,000.00 SAVILLE FOUNDATION 80,000.00 WOOLWORTHS (PTY) LTD 250,000.00 CORONATION FUND MANAGERS 500,000.00 SANLAM FOUNDATION 3,000,000.00 138,286,250.00

ISFAP Pilot: Roles & Responsibilities Universities o work with the ISFAP pilot team to select students to be included in the pilot; o supply the wrap-around support following guidelines set out by the DHET and the ISFAP pilot team; o supply programme managers (50% funded by ISFAP); and o to utilise specific custom programme management technology to enable monitoring and feedback Students o participate in the first year experience and mentoring programmes; o attend lectures and tutorials; o supply regular feedback for monitoring; and o engage with the support system

ISFAP Pilot: Roles & Responsibilities The ISFAP Pilot Team (including DHET representatives) o the selection of means tested students to be funded; o the disbursement of funds through appropriate channels for studies, accommodation, books, food and stipends; o the structure and management of partnerships between ISFAP and universities/tvet college; o the design and implementation of appropriate student support; o the determination and monitoring of key performance indicator metrics; and o the integrated information technology platform * for maintaining and tracking student data across multiple fields, which reflect the areas of wrap-around support.

Wrap-around Support Funding secured within pilot o Project managers at universities and TVETs o Software reporting and tracking Support Activities: o Tutorial support o Life support o Admin support o Life skills training o Mentorship

Wrap-around Support

Student & Public Response to ISFAP Model Institutions o All Universities requested to be part of the pilot o Universities that were not selected campaigning to be included o Written feedback from following institutions in support of the model: Stellenbosch University of Cape Town Wits Private Sector o Presentations to BASA, BLSA, ASISA all received unanimous support o Private institutions donated over R138m to ensure the pilot is implemented at short notice o Private institutions donated over R20m in operating costs to ensure the pilot is implemented at short notice

Challenges to ISFAP Implementation TVET Colleges o Concept of ISFAP is to: Fund more students (missing middle) Successfully fund (total cost of study) and offer support to increase graduation rates o Key reasoning applied to University students and application of ISFAP: University courses are desired / supported by the private sector ISFAP approach is to fund and support these students, creating more graduates by reaching out to the private sector as they desire/support this product o Private businesses do not desire/ support the NCV s or Report 191 s programmes at this stage. TVET branch strategy is to introduce mote Occupational Programs into TVET Colleges. o ORBIT College : Way forward : running a pilot at this college starting in August for Boilermakers and electricians. Phase the funding and support components of ISFAP into TVET colleges in line with the TVET branch development strategy

ISFAP Pilot Amendments The following key areas of the ISFAP model have been refined and amended over the last three months: o Expected Family Contribution and Decision Matrix - detailed matrix developed o Development of process to obtain household means o Development of funder requirements (constraints to be applied and reporting) o Set-up of Donor Committee o The scope of funding is being amended and developed (B-BBEE and SETA s) Development underway according to input received: o Phasing / Incorporation of TVET colleges in ISFAP o Social Impact Bond o Social repayment of ISFAP support (active citizenry) o Funding support and requirements from B-BBEE and SETA sources

Proposed ISFAP Model Amendments Proposals from external finance companies: o Separate the Loan and Grant contracting institutions within the model to increase focus and repayment ability Proposals from the Social Impact and Funding modelling team o Detailed structuring of the Social Impact Bond o Repayments to funding could be structured as a tax rather than individual loan repayment o Social repayment of grants active citizenry mentorship to future students Proposals from the public commentary process include (but not limited to): o Control/minimisation of all/any profits generated by the private sector o Suggestions regarding the operational role/components still to be performed by NSFAS o Broaden the scope past occupations of high demand o Incorporate post graduate studies in the program o Ensure solution is scaled to the White paper requirements

ISFAP Pilot Amendments Continued o Align the decision making process and timing of such to the institution decision and registration process o Sub-commission to investigate student non financial support requirements o Clarification and extension of some unclear areas of the report

Accommodation of Proposed ISFAP Model Amendments Will any of the proposed amendments be accommodated in the ISFAP model? o The ISFAP model is continually being developed: Through the development of the Public Private Partnership Feasibility process Through the experience gained from the pilot Though stake-holder engagement Through documenting the experience and issues at NSFAS o All proposals will be evaluated by the project steering committee and incorporated when agreed o The development of the final model will occur through a process of progressive elaboration taking into consideration the outcomes of the feasibility study, what is learnt from the Pilot, the public comments and consultation process.

Accommodation of Proposed ISFAP Model Amendments Key proposals that are likely to be incorporated: o Separate the Loan and Grant contracting institutions within the model to increase focus and repayment ability o Control of all/any profits generated to be mandated and managed within the PPP agreement o Final solution will not only focus on occupations in high demand but also cover general formative degrees, funder constraints may focus their funding on certain degrees o Timing of decision and distribution process must be aligned with Institutions timing of decisions and registration o Details around the NSFAS operating model will be explored in forthcoming workshops Commitment to develop a model that works for all stake-holders incorporating all points where possible, being cognisant of significant negativity from student representatives towards loans and the incorporation of the private sector, whilst still pursuing alternative funding sources as defined by the mandate, within the fiscus constraints as described by National Treasury

Accommodation of Proposed ISFAP Model Amendments Key workshops coming up: o Workshop with DHET/NSFAS to determine operational requirements from NSFAS and what will be procured from ISFAP through the PPP agreement o Workshop with TVET branch to document he TVET branch strategy and produce phased plan of ISFAP to run alongside this Key broad principles of ISFAP remain unchanged but constantly challenged: Public / Private Partnership Additional funding sourced from all sectors, and particularly the private sector Loan and grant model determined by household income Progressive support offered to the poor Total cost of study and student wrap around to increase graduation and throughput Key input into the development of a funding solution is the outcome of the Presidential Fee s Commission

Thank You