The Student Forum for Service Delivery called for the scrapping of the National Student Finacial Aid Scheme (NSFAS) and is advocating for funds to be directly transferred to universities. Their calls stem from concerns over leadership instability and alleged irregularities in the awarding of contracts to distribute NSFAS Allowances.
NSFAS provides comprehensive funding to more than one million students registered at public universities and Technical and Vocational Education and Training (TVET) Colleges in South Africa. These students receive money for tuition and registration fees. They also receive several allowances for accommodation, meals and stationery.
A 2023 investigation found that there may have been possible relationships between key individuals including NSFAS CEO Andile Nongogo and the Fintech companies appointed to pay allowances directly to students.
While NSFAS said the contracts of these companies are set to be terminated, it remains unclear when they will be.
Nzimande said they will not go back to distributing money directly to institutions. They say forensic investigations revealed that a lot of corruption occurred when institutions were paid money directly to students.
NSFAS will not be scraped we do not intend to go back to giving money to institutions to then decide who gets funded, none whatsoever. We undertook a forensic investigation some years ago and we found that there was just a lot of corruption that why we decided on a student funding model that students apply directly to NSFAS.
The minister also commended NSFAS for improvements made to their systems which they believe improved the efficacy of distributing funds to students
We don't intend to change that we think it has improved a lot in terms of better funding of students and distribution of these resources.
Direct Allowance Payment Challenges
When the direct payment system for NSFAS allowances was implemented, it was far from smooth sailing. Students complained about the late payment of allowances, excessive bank charges and difficulties with the student onboarding processing themselves onto the system.
NSFAS said that students will only be charged R12 per month for using their NSFAS bank account. However, this has not been the case. In addition to the R12 bank fee, students have complained about exorbitant charges they have incurred as they transact with their money.
A price comparison from OUTA revealed students are being charged for transacting with their NSFAS bank account at significantly higher charges compared to other banks.
NSFAS Spokesperson, Slumezi Skosana, said it is standard practice to impose fees for continuing to use their NSFAS bank account. They added that it would be misleading for students to use an institution like a bank and not pay fees.
In August, the minister conceded that bank changes were inevitable but revealed that they negotiated lower costs for students.
In relation to bank charges to student accounts, I have been briefed that NSFAS negotiated for a R12 monthly bank charge, which excludes money transfer costs to other banks.
The minister added that they directed NSFAS to relook at the entire bank charges regime to find possible measures to further reduce these costs for our beneficiaries.