The pilot phase of the Ikusasa Student Financial Aid Programme (ISFAP) is on track to be rolled out in the 2017 academic year.
Two hundred million rand has been raised for the pilot project, in which 2000 students have already been selected to participate said Leon Campher, chief executive of the Association for Savings and Investment South Africa (Asisa).
ISFAP, backed by government and the private sector, is to help fund the tertiary education of poor and the so-called missing middle students. Missing middle students, many of whom participated in the #FeesMustFall protests, are from families considered too wealthy to receive government loans or bursaries and too poor to fund their own studies.
Campher, who was reporting back to industry stakeholders after a CEO Initiative Meeting, said students whose family units earn less than R600 000 per annum would be eligible to receive assistance.
To qualify, students must also intend reading for degrees or qualifications in scarce-skills professions such as engineering, medicine, nursing and artisan trades.
The R30 billion to R40 billion per annum programme is to be funded through grants, private sector contributions and social impact bonds.
“We would hope, in due course, that most of the employers in South Africa will divert some of their skill spend into this vehicle. That’s why it is being dealt with at the highest level through the CEO Initiative,” he said.
Campher said social impact bonds would be issued to the savings sector which includes life offices, pension funds and fund managers.
The social impact funds will not be based on heavy returns. But negotiations are underway to allow those who take up the bonds to could score BEE points.
“If a corporate takes it up, especially in the financial sector, it could count as an equity equivalent towards its ownership,” he said.
Funding is to be allocated to students based on a “matrix of disadvantage”, with students from poorer families likely to be fully subsidised while those from relatively higher income families likely to receive funding during the first year of study and access to loans thereafter.
Students will be expected to repay the loans, with interest, once employed. The loans will carry no interest for the duration of the students’ studies, interest will accrue from the date of employment and students will be expected to start repaying the loan after working for one full year, he said.
Campher said plans are devised to lessen the likelihood of students failing to repay their loans. The National Student Financial Aid Scheme (NSFAS), administered by the government, has suffered shortfalls as not all beneficiaries repay loans.
“Quite clearly there are issues with students and disadvantaged students, we understand that. But unfortunately, the country cannot afford free education for every student at varsity. It’s not going to work,” he said.
He said graduates who are unable to find jobs, after studying skills that aren’t in high demand, are unlikely to pay off their student debt. Thus the scheme will prioritise high-demand skills.
Plans will also be put in place to address the funding of students who do not pass. Campher said Ikusasa would attempt to maximise the ability of students to pass through internships and other training initiatives.
The 2000 students selected to participate in the pilot project are registered at a mix of urban and rural universities as well as at one Technical Vocational Education and Training (TVET) college.
The pilot programme, which will be refined during the course of the year, is likely to be rolled out in 2018.
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