The investigation into maladministration at the National Student Financial Aid Scheme (NSFAS) could result in more than R700 million being returned to the scheme. This comes after months of work by the Special Investigating Unit (SIU)
The SIU recently informed parliament that they have secured acknowledgement of debt from students and a Technical and Vocational Education and Training (TVET) college totalling more than R49 million rand.
Students in Gauteng and the Western Cape have signed an acknowledgement of debt of R3.4 million and R3.2 million respectively.
This builds upon the approximate R688 million already recovered by the unit from TVET colleges and universities. The majority of this money has been returned by the University of Johannesburg (UJ) and the University of Pretoria (UP) who returned R311,8 million and R200 million respectively.
On the other hand, the SIU told parliament that NSFAS also owes money to institutions. This includes owing R180 million to 10 institutions in the North West and Free State, R106 million to institutions in Limpopo and R268 million to institutions in the Western Cape.
Why This Money Is Being Returned
The SIU revealed the funding of more than 40,000 ineligible students cost the NSFAS more than R5.1 billion between 2018 and 2021. The recovery of funds from these students forms part of the SIU investigation into the management of the finances of the NSFAS.
This invention also looks at the allocation of loans, bursaries and any other funding payable to students and any related unauthorised, irregular fruitless and wasteful expenditure incurred by the NSFAS or the State, including the causes of such maladministration.
The SIU said several factors had led to the funding of ineligible students. This includes overpayments, underpayments, missing students, unfunded students and several other scenarios.
Overpayments and underpayments occur as disparities between the advance payments made and the information provided in remittance advice. Ideally, this advice should encompass all students approved for NSFAS funding.
Overpayments arise when NSFAS disburses more funds to an institution than allocated, while underpayments occur when NSFAS allocates less than the required amount for funded students.
The issue of missing students arises when institutions believe that certain students should be funded by NSFAS but do not appear on the funded list. This problem often stems from a lack of a reliable process to validate student applications and inconsistent feedback provided to institutions regarding funding statuses.
Unfunded students are those initially granted NSFAS funding but later had their funding revoked. This can occur due to various reasons, including a lack of reliable processes to validate student applications and provide consistent feedback to institutions.
Questions arise regarding the allocation of funds for these students and how NSFAS accounts for such disbursements.
Other scenarios, such as double funding/double dipping and instances of students never attending institutions but still receiving allocations cause further challenges
Double-funded students refer to those who receive both NSFAS and third-party funding, while instances of students not attending institutions but still receiving allocations raise concerns about the accuracy of funding allocation processes.
The SIU said additional scenarios may emerge based on ongoing engagements with institutions.
The Impact of This
The SIU explained that NSFAS is funded by the fiscus and its impact will be felt at this level. This can lead to two possible outcomes where either NSFAS owes institutions money or institutions owe NSFAS money.
If institutions owe NSFAS, it implies that they have received more funds than they were entitled to, and thus they are in possession of state assets. On the other hand, if NSFAS owes the institution, it suggests that there has been an error in the budgeting process, leading to NSFAS having outstanding liabilities to the institution.
The SIU suggested that in cases where NSFAS owes institutions, there may need to be a re-evaluation of the budget process to identify funds to settle the NSFAS liabilities.
Recovering Money From Institutions
The SIU visited 58 institutions across the country and reported a common trend of institutions acknowledging outstanding credit balances owed to NSFAS pending the completion and approval of the close-out process.
However, some institutions have been resistant to repaying these balances, with some claiming they are owed funds from previous academic years.
Some institutions indicated that they will not be repaying the credit balances that they have in their coffers until NSFAS settles 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.
Recommendations To NSFAS
The SIU believes that by streamlining communication and processes across the value chain, NSFAS can improve efficiency and accountability in fund distribution and management.
The SIU recommends that NSFAS performs timely close-out reconciliation of amounts distributed to these institutions. The SIU is of the firm view that this process must not only be done at year-end but twice per year to avoid unnecessary misuse of NSFAS which were not distributed to students by the institutions.
The SIU advised NSFAS to establish control accounts for each institution and regularly reconcile them to institution-level accounts. They believe this can enhance transparency and accountability by allowing for the identification and resolution of discrepancies promptly.
