NSFAS — the state bursary scheme at the root of SA students’ outcry in 2023
In addition to the challenges of funding and accumulating debt, National Student Financial Aid Scheme (NSFAS) students have had their accommodation allowance capped at R45,000 per annum. Students and institutions have expressed disappointment with this decision but NSFAS is not budging. NSFAS says it has capped student accommodation allowances at R45,000 based on ‘affordability’.
The 2023 academic year started with students voicing their grievances about the financial burden of tertiary education. At the University of Cape Town (UCT), the Students’ Representative Council (SRC) initiated a campus shutdown on 13 February to protest against issues facing students that mainly concerned fee blocks, financial exclusion and student housing.
The latter is of particular importance as the university’s student housing department made the decision to revoke accommodation offers for students with fee blocks. Additionally, NSFAS capped their accommodation allowances at R45,000 per annum — which has left many students without housing or any viable alternatives.
NSFAS accommodation capping stumps students and institutions alike
Contempt for the NSFAS accommodation allowance caps was omnipresent on campuses throughout the country.
Students from the University of Pretoria (UP) staged a demonstration where students slept outside campuses to bring awareness to the plight of unhoused students in the face of NSFAS’s decision. On Wednesday, 1 March, students at the University of the Witwatersrand also protested as their SRC announced a campus shutdown after many students slept in libraries and other university spaces because they could not afford accommodation after NSFAS capped the accommodation allowance.
Rikus Delport, from UP’s Department of Institutional Advancement, had this to say after UP attempted to apply for an exemption from its accommodation allowance caps:
“The University of Pretoria is disappointed in NSFAS’s rejection of the exemption application made by the university. This means NSFAS will continue to implement the R45,000 cap on accommodation funding and in the process shift the financial burden on to students and the university, which are already experiencing financial strain.”
Delport explained that UP had been trying to engage with NSFAS since the start of the year, foreseeing that the proposed accommodation allowance caps would be a problem.
“When the university sent a letter to NSFAS in January 2023, requesting it to urgently reconsider the cap on accommodation allowance, we did it in good faith and in support of students as the actual cost of both UP-owned and accredited accommodation exceeds the capped amount of R45,000. The difference between the actual amount and the capped amount will lead to outstanding amounts on student accounts, which may not be recovered.
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“The less than inflationary increase exacerbates the financial burden placed on the university, thereby reducing its ability to fund the difference between the actual and capped accommodation rates. Load shedding has placed increased pressure on the university’s operational budget.
“The cost of diesel to run the generators on our campuses and residences is approximately R1.5-million a day on Stage 3 load shedding and R2-million a day on Stage 4. The university is committed to helping students and will continue to work with the student leadership to find sustainable solutions.”
UCT says it is engaging with NSFAS about the accommodation allowance caps. Spokesperson Elijah Moholola said: “Following the announcement by the minister of higher education, UCT is having relevant engagements … around the NSFAS funding cap. UCT is actively working on finding ways to mitigate the impact of this funding shortfall on students.”
Wits management also called out NSFAS’s decision to cap accommodation allowances.
“Wits appealed the decision and lobbied for a differentiated approach that takes the real cost of accommodation into account. This will be pursued by Universities South Africa. In the interim, Wits is assisting NSFAS-funded students on campus and in accredited private residences, who have accepted the cap for this year.”
A UCT student, who did not want to be named, shared their thoughts about the accommodation allowance caps with Daily Maverick:
“I think the capping of accommodation allowances is quite unfair, considering the cost of living. I can only speak for Cape Town and UCT; it’s well known that Cape Town and UCT are expensive. I don’t think NSFAS has the students’ best interests in mind … cutting costs by sacrificing the opportunities of thousands of underprivileged students.”
NSFAS spokesperson Tsholofelo Zweni told Daily Maverick there are three brackets of student accommodation: the lower-income bracket, the middle-income bracket, where prices range from R3,000 to R4,500 per month; and the upper-income bracket, where prices are R5,000 to R8,000 and can go up to R14,000 per month. Zweni explained that NSFAS accommodation allowances were based on these categories.
“Given the diversified market for student accommodation, NSFAS settled for the middle ground with the second market segment based on affordability.”
Amid calls to lift the R45,000 accommodation cap, NSFAS pointed to the high costs of student accommodation as being the main problem. NSFAS released a statement on Thursday, 23 February, where it discussed reporting accommodation providers to the Competition Commission.
Outa investigation into the allocation of funds and irregular awarding of tenders within NSFAS
The Organisation Undoing Tax Abuse (Outa) released a statement on 16 February that outlined its investigation into the allocation of funds and irregular awarding of tenders within NSFAS. The investigation flagged three tenders: the NSFAS head office leasing, a contract to supply a digital tool to calculate student allowances, and a contract for direct payment of NSFAS allowances to students.
Outa found that in March 2022, NSFAS signed an office lease with Dynamic SA Holding for the Halyard building in Cape Town where a deed search showed Ziningi Properties as the building owner. Outa noted the following:
“The lease was signed for five years, backdated to start on 1 February 2022. According to the tender, it was supposed to be a two-year lease with an option to renew for another three years. The offices total 8,479 square metres and the cost over the rental period is R166.906-million, including VAT and escalations.
“The 2020/2021 NSFAS annual report indicated that there were 383 people employed at NSFAS and 68 vacancies. If those vacancies are all filled and the 451 total employees are taken into account, then every employee will have an average workspace of approximately 18.8 square metres. Based on 451 employees, NSFAS will be paying an average of R74,000 per employee per year to lease this building.”
For context, the NSFAS regional offices in Johannesburg are situated in the Old JSE Building where — according to Office Space Online — the rates are R80 per square metre and offices range from 150 to 2,213 square metres. With this in mind, NSFAS could be paying R2.124-million per annum and R10.622-million over a five-year period.
In NSFAS’s 2020/21 annual report, its budget for lease rentals is presented under general expenses as part of supplementary information that was noted to be unaudited. Here, its 2021 lease rental budget was R8.129-million per annum. The NSFAS Cape Town office lease comes to R33.381-million per annum and even considering that the 2021/22 annual report is yet to be released, it is hard to believe such an amount would fit within its budget.
In this report, the Auditor-General also noted: “The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records.”
Paying R166.906-million to rent over a five-year period appears exorbitant and over budget, especially when it seems NSFAS has overcompensated for how much space is needed for its operations. Rudie Heyneke, Outa’s portfolio manager, told Daily Maverick this information is particularly concerning in light of student subsidies for accommodation being reduced.
Heyneke said since the publishing of the statement, Outa had submitted requests under the Promotion of Access to Information Act (Paia) for the documents of the three tenders mentioned in their investigation.
“All three requests have been denied by NSFAS. We submitted internal appeals on all three Paias in December 2022, but to date, we have not received a response although NSFAS informed us that they will respond to the appeals by 6 February 2023. We followed up, but still no response.”
Outa is also looking into the NSFAS accommodation accreditation tender to assess any potential problematic spending of funds.
In response to the allegations, NSFAS said: “NSFAS followed an open, competitive bidding process which was compliant in all aspects with the PFMA and National Treasury regulations, all of which was submitted to the board for consideration prior to their approval of the lease tender.”
Student funding an ongoing problem in South Africa
According to the vice-chancellor of the University of Zululand, Professor Xoliswa Mtose, with no solution in sight for student funding issues in South Africa’s higher education system, it is unsurprising that the academic year began with protests.
Mtose made the comment during a webinar on student funding hosted by Fundi in collaboration with the Mail & Guardian.
“The simmering tensions … that erupted during the 2015/2016 campaigns and recently, underlined the fact that the problem can no longer be postponed. The problem has continued to manifest itself as an entanglement of evolving policy positions on government budget allocations in the sector and an overriding principle in South Africa’s higher education funding that costs must be shared between students, other families and the government … further exacerbated by a mismatch between state funding, political expectation, institutions and societal realities. Hence, the solution to the problem cannot be in isolation.”
Mtose says an urgent sustainable solution to student funding is needed.
“I would like to argue that tackling the quagmire requires an integrated and coordinated approach involving multiple stakeholders.”
Dr Birgit Schreiber, a consultant for the higher education sector, argues that the South African tertiary education sector is in a student funding quagmire because of years of mismanagement of funding.
Schreiber said to resolve the quagmire, “We need to somehow get back to the idea that education is a public good. It needs to be funded by the public sector, and government in various forms needs to be responsible for education.”
The focus of student protests in the past two years has been the increasing burden of student debt, which was exacerbated by the Covid-19 pandemic.
It has been reported that student debt increased by R3-billion between 2020 and 2021, with the total debt at R16.5-billion by the end of 2021.
Ishmael Mnisi, the spokesperson for the Department of Higher Education and Training, told Daily Maverick that gross student debt was R17.2-billion in 2021.
Mnisi said the increase in the gross debt per year from 2018 was as follows: 4.2% in 2018, 16% in 2019, 25.4% in 2020 and 14.1% in 2021.
He said audited financial statements for the 2022 academic year would be available after 30 June 2023.
With no solution in sight to the funding issues, many institutions have instituted fee blocks where students with debt are not allowed to register, which often prevents them from completing their studies.
According to a report released by UCT’s South African Labour and Development Research Unit, NSFAS was established in 1991 to give academically capable students from historically disadvantaged households access to tertiary education. NSFAS was intended to cover the full cost of study for these students — tuition, books, meals and accommodation.
Initially, NSFAS funding was considered a loan the government introduced in 1999 to give financially poor matriculants access to university. The beneficiary was required to repay the money after completing their studies. To be funded, the student needed to pass at least 50% of their modules and take no longer than five years to complete their qualification. After the #FeesMustFall protests, NSFAS became a full bursary in 2018.
NSFAS’s Zweni told Daily Maverick: “The pronouncement by government in December 2017 on free education resulted in a policy shift wherein NSFAS qualifying students from 2018 would all be receiving bursaries. This meant that all first-time funded students from 2018 would now be receiving bursaries, whilst those who were funded prior and owed NSFAS would still be required to pay back NSFAS.”
Why is student debt not going down?
Mnisi says that on a yearly basis, a certain percentage of student debt is written off, and student debt written off as a percentage of gross student debt in 2021 was 59.6%, 55.9% in 2020, 55.2% in 2019 and 53.4% in 2018.
Despite part of the student debt being written off, there has not been a dip in this debt because the cost of living of higher education has escalated, and few families can afford to pay for it.
Even before NSFAS became a full bursary scheme it was still unable to fund students across the sector who needed and qualified for financial aid despite having obtained an additional allocation each year. The situation has been exacerbated by more students wanting to access higher learning coupled with less funding. DM