Minister says financial aid scheme is not in crisis

Despite having its chief executive officer on special leave pending an investigation into the alleged improper awarding of banking contracts, the National Student Financial Aid Scheme (NSFAS) is not in crisis, according to Dr Blade Nzimande, South Africa’s minister of higher education, science and innovation.

NSFAS is the government’s bursary scheme for students who lack the finances to access higher education. Students have been protesting about changes in some of the scheme’s administrative processes, including increased bank charges. The charges are also related to the contracts that are under investigation.

However, Nzimande said the fund is not in a crisis as government detractors would want the public to believe.

“We have turned the tide in student funding for the children of the poor and the working class, and NSFAS is the single largest student funding agency in Africa and a unique scheme in the world in that it completely funds students for their study, travel, accommodation and personal care,” said Nzimande at a briefing in Pretoria, South Africa, on 19 September.

He said he remains committed to finalising the work on a new Comprehensive Student Financial Aid Model, which will be announced once it receives cabinet approval.

NSFAS in 2023

Nzimande said all qualifying students on the Department of Higher Education and Training bursary scheme who have been admitted for funded programmes at public universities and technical and vocational education and training (TVET) colleges were supported during the 2023 academic year.

A total of 1,131,419 applications have been received through the scheme’s online application portal, and 156,700 are from South African Social Security Agency (SASSA) beneficiaries.

NSFAS provided funds at the beginning of the year for upfront payments to institutions to cover costs related to registration, tuition fees and living allowances to ensure that all beneficiaries were registered in all institutions without paying an upfront registration fee.

Since 1991 NSFAS funding has grown from disbursing ZAR21.4 million to almost ZAR50 billion (US$2.7 million) to fund students.

Changes prompts protests

However, NSFAS has come under fire over its operations amid allegations of improper conduct concerning the appointment of direct payment service providers and bank charges.

Nzimande said he was awaiting a report on the NSFAS investigations into the appointment process of four ‘direct payments programme partners’ following public allegations on their appointment process.

In February, NSFAS announced the introduction of the direct payment system, partnering with banking service providers eZaga, Tenetech, Coinvest and Norraco. It was hoped that this system would reduce unauthorised access to beneficiaries’ allowances, payment of ghost students, inconsistencies and delayed payments of allowances. However, students have complained about the bank charges they have to pay.

As a result of the allegations about the appointment of the service providers and the alleged involvement of the NSFAS CEO Andile Nongogo in these appointments, the NSFAS board placed him on a leave of absence pending a probe.

The minister has directed the NSFAS to look at the entire bank charges regime to find possible measures to further reduce these costs for beneficiaries. On the claims that the NSFAS disbursed incorrect amounts to beneficiaries, Nzimande said they were misleading and untrue.

Ministerial task team

In June 2021 Nzimande appointed a Ministerial Task Team (MTT), chaired by Professor Xoliswa Mtose, the vice-chancellor of the University of Zululand, to support the work of the Department of Higher Education and Training (DHET), NSFAS and the National Treasury to conceptualise a new student financial aid model for the South African higher education and training system.

The work of the MTT was carried out in two phases: the first to support immediate recommendations for the 2022 budget process and the second to make medium- to long-term recommendations for the future.

The MTT submitted an initial report to Nzimande in July 2021, which was also presented to cabinet, and its final report on 22 June 2022. The MTT explored three high-level policy models, supported by financial models, to guide the decision-making about its final recommendations.

To strengthen the NSFAS Board, Nzimande said that he had replaced two members who had resigned with experienced higher education experts, Professors Laurens van Staden and Ntombizozuko Dyani-Mhango and Lucian Kearns, the current acting chief financial officer at the DHET.

Nzimande said he was finalising the appointment of a representative from the government treasury who would be part of the board.

NSFAS and clean governance

NSFAS did not comment on the minister’s statement but last month in a statement confirmed that several allegations were made against the CEO relating to his work.

Ernest Khosa, the chair of the board, said the board commits itself to transformation and clean governance at NSFAS.

Chantel King, the opposition Democratic Alliance shadow minister for higher education, described Nzimande’s briefing as a “publicity stunt”, adding that student funding remains in chaos because of a “tone-deaf NSFAS board”.

She said it indicates that either the NSFAS board or students are lying to Nzimande on provisional funding status, appeal status, evictions and direct payment service providers’ incompetence.

King added that the briefing highlighted the NSFAS board’s inability, since 2021, to handle ICT and administrative challenges. “This board must shape up in addressing these challenges or ship out.”