NSFAS scrambles to address criticisms, but all not convinced

South Africa’s embattled National Student Financial Aid Scheme (NSFAS) this week announced measures to address some of the criticisms levelled against it, but not everyone is convinced that everything is now in order.

At a media briefing on Monday 4 March, the acting NSFAS chairperson, Professor Lourens van Staden, conceded that there had been delays with the payment of allowances to students, and said the problem was being tackled from various angles.

NSFAS has deployed servicing administrators to institutions in the past two weeks to “actively address registration concerns and challenges faced by students”. These visits – and those of NSFAS board members to “hotspot areas” – would be continued, to “alleviate tensions”.

It was Van Staden’s first public statement since his appointment following the decision by the chairperson, Ernest Khosa, to take leave of absence in response to allegations in January that he and Higher Education Minister Dr Blade Nzimande had received kickbacks from a NSFAS service provider. Both have denied the allegations.

Intermediaries

Van Staden, the former vice-chancellor of the Tshwane University of Technology, said on Monday that universities were asked to step in to “operate as a channel” for the disbursement of the February and March allowances to students.

NSFAS sees this as an ‘interim’ measure only, with direct payment of allowances to students set to resume in April – by the “partners assigned to institutions last year”.

NSFAS had received nearly two million bursary applications by the closing date of 15 February. About 23,000 of these had been processed per day through third-party verification, with priority given to those who have received firm offers of admission from universities or who had already enrolled at TVET (technical and vocational education and training) colleges.

So far, nearly 1.3 million students have been provisionally funded, but there have been challenges with the payment of their allowances.

Allowances

Last week, Stellenbosch University (SU) made an emergency fundraising appeal to assist its 5,000 NSFAS recipients with food because they were still awaiting their allowances at that stage. There had been similar reports from institutions elsewhere in the country of students not being able to pay for essentials.

This week, Van Staden said NSFAS disbursements had been held up largely due to “registration delays”. He spoke of “challenges experienced at the beginning of the 2024 academic year, which led to delays in receiving registration data from institutions”.

He said NSFAS would “continue its engagements” with the Department of Basic Education about the impact of the practice since 2020 of releasing matriculation results only in mid-January on NSFAS applications and funding decision processes.

To effectively act as NSFAS agents, upfront payments were made to institutions at the end of January and February this year. Van Staden said most universities “committed to paying students from the last week of February”. His statement contains specific dates that each university had committed to doing so.

According to Van Staden, the first upfront payment (totalling ZAR2.8 billion – about US$149 million) was meant for books and accommodation. Provision was also made for two months’ worth of allowances for medical students who had already started their academic year in January.

In addition to covering books and accommodation, the second payment (totalling ZAR2.1 billion) was for travel, personal care and living expenses.

What universities say

University World News checked with a sample of universities, and several confirmed receipt of funds from NSFAS, and that they had used it to pay students their allowances.

“We managed to cover meal and book expenses. However, the upfront payment wasn’t adequate to cover accommodation allowances, which are also due at this point,” Herman Esterhuizen, media liaison manager at the University of Johannesburg, told University World News.

Louis Jacobs, the director of corporate communication at North-West University (NWU), outlined some of the difficulties that are caused by the delays.

“The delayed release of funding statuses is causing concern. We have had to extend our registration period three times to accommodate students who are conditionally registered and still awaiting evaluation status from NSFAS.

“If students do not know their funding status, they cannot fully register, nor can they move into private off-campus accommodation, or fully participate in the academic programme,” he said. He added that NWU was still awaiting outstanding payments from 2023.

Rhodes University was also waiting for “some outstanding payments from prior years”, according to its communications director, Luzuko Jacobs.

‘Missing middle’ loan scheme

Van Staden said NSFAS had received nearly 31,000 applications for its new loan scheme by the closing date of 15 February, but still envisages allocating loans to 31,800 students because it would be requesting institutions to submit data for registered students in line with the requirements of the loan.

The scheme for the so-called missing middle – students from households with a combined annual income of more than ZAR350,000 but less than ZAR600,000 – had been announced by Nzimande in January.

Van Staden on Monday described NSFAS as a “decisive intervention by government to broaden access to those sections of our communities who had no access to post-school education and training”.

He admitted that “NSFAS has challenges”, but said the scheme “created universal access to post-school education and training”, which “has been a near-miracle, given the state of disrepair that existed pre-democracy, where the majority of black South Africans had limited or no access at all”.

Not everyone impressed

However, not everyone is impressed with NSFAS.

SU’s chief operating officer, Professor Stan du Plessis, a macroeconomist by training, told University World News that he considers the scheme to be “financially irresponsible” and that it should be completely redesigned because it suffers from several “design flaws”.

He argues South Africa cannot afford to provide fee-free higher education, even to poor students. Instead, they should be required to repay some of the money currently granted to them as a bursary once they start working and earn an income.

This would make the scheme more sustainable. And it would also be the right thing to do, morally speaking, because university graduates get a large private benefit from their education, already heavily subsidised by the taxpayer. They are more likely to be employed, and employed in better-paying jobs, than those without higher education, he points out.

#FeesMustFall

The background to the introduction of NSFAS bursaries were the #FeesMustFall protests in 2015 and 2016. South Africa’s president at the time, Jacob Zuma, appointed Justice John Heher to lead a commission of inquiry into the feasibility of making higher education and training fee-free.

The commission said the South African state did not have the fiscal capacity for this, and recommended an income-contingent loan scheme with collections handled by the South African Revenue Service (SARS).

However, Zuma ignored this and, on 16 December 2017, announced “free education” for “poor and working-class” students from households with a combined income below ZAR350,000 a year.

“This addressed the problem of financial access to higher education, which certainly required serious attention,” Du Plessis said.

“But it places an unsustainable burden on the country because of the lopsided design where the main beneficiaries of the schemes, the students, do not have any obligation to contribute after graduation.”

‘Bottomless pit’

Du Plessis argues NSFAS was ill conceived to begin with, and its costs have ballooned out of control. In the latest national budget, NSFAS received ZAR53.6 billion, more than the ZAR47.7 billion allocated to universities in the form of state subsidy. Government’s support for universities first stagnated and fell behind inflation and lately declined in absolute terms, due to the financial burden of NSFAS.

“The current NSFAS is a bottomless pit swallowing taxpayers’ money, so it would be better to scrap it and start over,” Du Plessis said.

“We must set up a capitalised fund in which money will flow back once students start repaying their loans. That’s the only way to make the scheme sustainable and to ensure a better distribution of responsibilities between society and students.”