How Much NSFAS Spent On Undeserving Students

The Special Investigating Unit (SIU) has revealed that the National Student Financial Aid Scheme (NSFAS) has spent billions of rands funding students who do not meet the eligibility criteria for bursaries. 

They believe this expenditure on undeserving students highlights the need for improved assessment and monitoring processes to ensure that financial aid is allocated to eligible recipients in the future.

The total expenditure of NSFAS on ineligible students between 2018 and 2021 amounted to more than R5,1 Billion. This money was spent on more than 40,000 students studying at 76 institutions around South Africa. 

Approximately 43 000 funded students were recently found to not qualify for the NSFAS funding when the NSFAS re-vetted all the students that were previously approved

The SIU recently presented a  breakdown to parliament by SIU illustrating the expenditure incurred by NSFAS on students who did not qualify for bursaries. These expenses include incorrectly paying for students tuition fees, living allowances, and other educational expenses for students who were ineligible for financial aid. 

Factors That Led To Funding Ineligible Students 

The SIU revealed that prior to 2021, the processes allowed for students registered at multiple institutions to be listed accordingly, resulting in the system permitting multiple registrations for the same student across different institutions. This led to the disbursement of funds to each institution. 

Before 2021, where the student registered at multiple institutions, the institution would submit the list accordingly and the system would allow multiple registrations of a student in different institutions to pass through to allocate disbursement to the respective institutions. 

"The SIU has visited 58 institutions across all nine provinces and may institutions are aware that they have some credit balances that still need to be paid back to NSFAS once the close out process has been completed and signed off."

The SIU has been encountering some push backs from some institutions with regards to the credit balances to be repaid back to NSFAS. It was revealed that some institutions are adamant that they are not willing to repay the money back to NSFAS as they are owed for some academic years. 

Institutions that have deposited the monies in an interest-bearing bank account are advised to repay all credits with interests earned on those balances back to NSFAS.

The SIU has revealed that some institutions are claiming that NSFAS owes them funds for the 2023 academic year and as a result, they will not be repaying the credit balances that they have in their coffers until NSFAS settle their debt as per the agreement signed between the institution and NSFAS. 

We have not been furnished with any agreements to corroborate their assertions that NSFAS owes them any monies.

This loophole resulted in some students receiving funding multiple times and obtaining multiple grants. To address this issue, changes have been made to the system to prevent such errors. 

The SIU noted that the system has since been changed to mitigate against these types of errors Now, funds for students are suspended until institutions verify the student's registration. 

This is why now many students receive a NSFAS status indicating that they are provisionally funded. They officially start benefiting from NSFAS once their registration is confirmed by the institution. 

Additionally, the SIU also noted that 52,532 students, amounting to around R2.4 billion in funding, were receiving NSFAS funding without disclosing any parent or guardian information. 

If they had disclosed their parent or guardian’s information, they may not have been funded by NSFAS as they may have exceeded the household income threshold. 

However, funds that were incorrectly disbursed to institutions where the student is not enrolled may still be retained by the institution in interest-bearing accounts. 

What The SIU Is Investigating 

Proclamation R88 of 22 signed by President Cyril Ramaphosa grants the SIU authority to investigate various matters concerning NSFAS. The proclamation empowers the SIU to probe allegations of serious maladministration related to NSFAS affairs, improper or unlawful conduct by NSFAS employees or officials, unlawful appropriation and expenditure of public funds or property. 

The SIU may also probe irregular or unapproved transactions affecting state property, intentional or negligent loss of public funds or damage to public property, and certain offences specified in legislation.