In 2022, the National Student Financial Aid Scheme (NSFAS) introduced a new payment system for the disbursement of NSFAS allowances. Concerns are now being raised by several stakeholders regarding NSFAS allowance payment challenges.
NSFAS provides comprehensive bursaries to eligible students enrolled in approved programmes at public universities and colleges in South Africa. The NSFAS bursary will cover a student’s tuition and registration fees.
In addition to this, NSFAS will also provide students with several NSFAS allowances, including an accommodation allowance, a learning material allowance and a living allowance.
Previously, NSFAS allowances were paid to institutions attended by NSFAS-funded students. The institutions would then disburse the NSFAS allowances to students or use service providers to disburse allowances to students.
In 2022, NSFAS announced that students will be paid their NSFAS allowances directly using a new payment system. NSFAS partnered with four service providers to bring the new direct allowance payment system to students.
Nsfas-funded university students were required to register with the services provided to begin receiving their allowances directly from June 2023. Less than two months have passed since university students began using the NSFAS bank account and several challenges have been raised by stakeholders.
Challenges With The New Allowance Payment System
The Social Youth Movement voiced its opposition to the newly implemented NSFAS allowance system for students funded by NSFAS. They say students are being charged high bank fees while the introduction of the NSFAS bank account has led to some students being defunded by the financial aid scheme.
NSFAS has made this shift in its banking system by outsourcing it to private corporations that operate on a for-profit basis and in doing so has arbitrarily excluded thousands of students from the system
Social Youth Movement’s National Coordinator, Raees Noorbhai says thousands of students’ NSFAS funding statuses were changed following the introduction of the new payment system. Students whose NSFAS status reflected that they were funded for the 2023 academic year now reflect that their status is pending a decision.
As a consequence of the change in NSFAS funding status, students are now not receiving their NSFAS allowances and are subsequently at risk of losing their accommodation according to Noorbhai.
We do not know why certain students have been removed from the system and certain students or not but it has pushed thousands of students in a situation where, for reasons beyond any of our understanding, they've been removed from the system and left exposed to hunger and homelessness.
Noorbhai says that students are being charged a monthly bank fee of R29 per month which affords them three ATM withdrawals and ten point-of-sale transactions. Students will be required to pay fees if they exhaust their free withdrawals and point-of-sale transactions.
NSFAS previously said that students will only be charged R12 per month for using their NSFAS bank account.
The Social Youth Movement is calling on NSFAS to overturn its decision to implement the new direct allowance payment system. They are currently deliberating with other student structures on how to deal with the current challenges facing students.
Calls For Minister To Account On NSFAS Bank Account Challenges
South Africa’s Official Opposition Party the Democratic Alliance (DA) has written to the Minister of Higher Education, Dr Blade Nzimande, and to the Banking Association of South Africa (BASA) to seek clarity on the NSFAS direct payment challenges.
The party wants Nzimande to account and prove that students will benefit more from the services provided by NSFAS to distribute student allowances.
Students and universities were kept in the dark about the direct payment system and its cost implications. On top of that, NSFAS beneficiaries are also still waiting on their allowances while service fees have already been deducted.
The DA is seeking clarity on the application requirements for financial institutions to offer direct allowance payment services, why the service providers selected by NSFAS were preferred above established banks and whether their service and transaction costs will benefit students.
NSFAS has acknowledged the concerns raised by students regarding excessive bank fees and difficulties in accessing their funds. They have committed to investigating these issues, including the inaccessibility of service providers, lack of clarity on fund access, and allegations of funds not reaching students.
NSFAS has instructed service providers to increase their presence at universities and colleges. This will enable them to engage directly with students and provide immediate assistance and address student queries regarding direct allowance payments.
Additionally, NSFAS has arranged a meeting with service providers and student leaders in an effort to resolve the challenges being experienced by students trying to access their allowances.