The National Student Financial Aid Scheme (Nsfas) continues to face backlash from students and the Department of Higher Education and Training (DHET).
Nsfas has been in hot water since the beginning of the academic year, and was one of the factors that lead to the eruption of intense student-led protests across the country.
Why is Nsfas under investigation?
The Board of Nsfas has now appointed an investigation team to look into the allegations of ongoing corruption and fraud, and has also placed its CEO, Andile Nongogo, on Special Leave while the investigation is ongoing.
In the interest of the image of Nsfas, the Board has resolved to investigate the allegations with a particular focus on the Direct Payment project. During the course of the investigation, the Chief Executive Officer will be on leave of absence.
The decision to place Nongogo on leave comes amidst public outrage and a damning report by the Organisation Undoing Tax abuse (OUTA) highlighting questionable practices surrounding the contracts awarded to the third-party financial service providers (FSPs) Nsfas has partnered with for the new direct payment system is has implemented.
It has also been revealed that Nongogo was not only present, but also participated in, the process of selecting and awarding these contracts to the four FSPs, namely Coinvest, eZaga, Noracco and Tenet Technology.
The arrangement was that Nongogo could be present (as he was invited to the meeting), but only attend as an observer.
However, recently leaked audio recordings of the meeting in progress, reveal that Nongogo participated in the discussion, despite Nsfas insisting to the Sunday Times that the selection process was independent, with the CEO having no part in deciding who was evaluated and having "no part" in awarding the contracts.
The recordings reveal that Nongogo spent around 13 minutes making comments and questioning Nedbank's nine-member delegation, and around 7 minutes with First Rand's 11-member delegation. The questions he aimed at the third-party financial service providers were between two and three minutes.
Wits School of Governance's Professor Susan Booysen, said that even if there may be an organisational culture that allowed for Nongogo's presence as a senior Nsfas official to sit in on these committees, "it strikes me as inappropriate because it is beyond doubt that senior people sitting in, influence the outcomes."
Even if there is a soft type of influence, there is the big boss sitting, asking leading questions and framing a discussion that is going to impact the outcomes that more junior people in that committee takes.
A former senior National Treasury official said it as "totally improper" for a CEO to sit in on a bid evaluation committee, even as an observer.
To investigate Nongogo, the Nsfas' procurement systems and its processes, the scheme has appointed Werkmans Incorporated, a law firm. Advocate Tembeka Ngcukaitobi and Mr. Sandile July have been assigned to lead the investigation, says Nsfas.
Nsfas initially refused to answer questions about the recordings or Nongogo's involvement, saying only that the questions "are part of the matters to be investigated by the appointed law firm."
Anything related to the appointment of direct payment partners has now become a matter under investigation and Nsfas will not be giving any comments until the investigation is complete.
Ernest Khosa, Nsfas Board Chairperson, says that the Scheme remains committed to "clean governance."
Once again, the Board of Directors wishes to reiterate its commitment to clean governance.
The new direct payment system, explained
In 2022, Nsfas revealed its plan to pay student allowances directly to beneficiaries. Previously, allowances were first sent to the universities and colleges where students are enrolled; tertiary institutions were then responsible for the distribution of funds to students.
In order to allow students to have direct access to and "more control" over their allowances, the new payment system was developed.
Minister of Higher Education, Blade Nzimande, said:
To correct issues with the payment of allowances, the Scheme sought an alternative, secure and student-centered approach, which will see students receiving their allowances through a bank card.
This payment method operates using a Nsfas Mastercard and a Nsfas Bank Account, similarly to normal banks and bankcards such as Standard Bank or FNB.
The payment system was first introduced at Technical Vocational Education and Training (TVET) colleges and was expanded to include universities in 2023, kicking off in June 2023.
The Nsfas Bank Account was introduced in collaboration with third-party financial service providers, namely eZaga, Coinvest, Morocco and Tenet Technology. Nsfas has called on its funded students to register or onboard each of the above-mention FSPs.
It was believed that these new Mastercards will provide students with access to value-added services, value for money-negotiated rates and banking freedom.
By registering for and opening their Nsfas Bank Account, beneficiaries will be able to receive their allowances directly from Nsfas, without having to wait for the funds to be paid through the institutions they are studying at.
This means that beneficiaries can access their funds quicker, which is especially important for those who depend on these allowances to cover their daily expenses.
Student complaints towards the new payment system
This comes after Stellenbosch SRC Vice Chairperson, William Sezoe, lodged a complaint asking the Public Protector to look into the awarding of the contract for the new Nsfasdirect payment system.
I have last week written to the Public Protector to investigate the National Student Financial Aid Scheme direct payment system and in particular the involvement of the CEO of NSFAS with the awarding of the specific tender.
Sezoe says that in his complaint he highlighted concerns around three critical issues:
- The involvement of NSFAS CEO, Andile Nongogo in the tender awarding process, considering his relationship with the directors of Coinvest, raises legitimate doubts about the fairness and impartiality of the selection procedure.
- The decision to award tenders to companies lacking financial licenses warrants clarification from NSFAS, as this poses serious doubts about their ability to handle students’ funds responsibly; and
- The justifiability of appointing companies charging exorbitant fees to students requires scrutiny, as it affects public funds, especially those allocated for education.
The implementation of the direct payment system has been fraught with challenges according to university students.
The serious nature of these challenges recently led student leaders in the Western Cape to march to Parliament and deliver a memorandum of demands to the Department of Higher Education, Science and Innovation.
Direct Allowance Payment Challenges
Careers Portal spoke to William Sezoe who serves as the Student Representative Council (SRC) Vice-Chair at Stellenbosch University to get a sense of the challenges facing students with regard to the direct payment system.
More than 5000 students at Stellenbosch University, who had been provisionally approved for funding from Nsfas, indicated they meet the eligibility criteria to be funded, and were required to onboard themselves onto the Coinvest system which would allow them to begin receiving their allowances directly from Nsfas, via the new payment system.
Sezoe says, according to Coinvest, just over 2 600 students were eligible to onboard themselves onto the system.
It's important to note that students were required to register for their Nsfas Bank Account and failure to do this, would lead to delays in allowance payment. Some 2 000 students who were unable to register for their Nsfas Bank Account would therefore not be able to access their allowances.
Why, if the university has 5 100 students approved for funding, why can only 2 600 students register?
When students enquired how many students have registered for the payment system during a meeting with Nsfas and Coinvest in June 2023, the service provider indicated that only 50 students, of the 2 600 students, had registered.
Sezoe says this is when students found out that only 2 600 students were eligible to onboard themselves, and they realised that more than 2 000 students, who were approved for funding, were unable to register.
Nsfas indicated they had registration data for 2 600 students. This suggested that the university did not submit registration data for approximately 2000 students.
Sezoe says Stellenbosch University disputed this and said they had sent registration for all provisionally-funded students. While the financial aid scheme and the university disputed how much registration data was sent and received, students were left without any money for food and accommodation.
At this stage, we are still not sure how they are going to clear up that matter.
It's important to note that the financial aid scheme will not approve the payment of allowances for students whose registration data have not been received. These students are classified as provisionally-funded and will only receive funding and allowances when their registration data is received by Nsfas.
Sezoe says some students also received the incorrect accommodation allowance leaving them with less money to purchase food throughout the month. Students who live in catered residences receive a lower NSFAS allowance amount (approximately R305) than students staying in self-catered accommodation (R1 650).
This could be the result of an error made in the interpretation of data received by NSFAS as the data indicates which type of accommodation a student is staying in and by extension how much money they should receive in their NSFAS bank account.
NSFAS disputes that claims that incorrect allowance amounts were paid to students are misleading and untrue.
NSFAS has also 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.
The Organisation Undoing Tax Abuse (OUTA) did a price comparison which 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.
Higher Education Minister, Blade Nzimande said they were brief regarding the R12 bank fee, but conceded that bank charges are inevitable.
This is not the first time has been placed under investigation
Unfortunately, Nsfas has a history of corruption allegations and dissatisfaction among students.
Last year, the bursary provider was also placed under investigation, which stemmed from claims beginning seven years ago and revolved around allegations of maladministration.
The investigation was green-lighted after the East London Magistrates’ Court, in May 2022, found Sibongile Mani guilty of stealing R818 000 of the R14 million that was accidentally credited to her by Nsfas in 2017, while she was a student at Walter Sisulu University (WSU).
Similar allegations were made back in 2014, this time with the Minister of Higher Education, Science and Innovation, Blade Nzimande pointing the finger.
These claims came after allegations of students buying funding from Nsfas, as well as officials awarding funding to students who did not qualify for the scheme, which is a similar situation unfolding in the present day.
The latest investigation into Nsfas will commence on Monday, 21 August 2023.