Lack of money to buy meals and pay rent is affecting the performance of students and threatening stability on campus, according to information shared by vice-chancellors with Universities South Africa (USAf). 

USAf represents the 26 university vice-chancellors in South Africa.

USAf CEO and spokesperson Dr Phethiwe Matutu said some of these challenges include concerns that hungry students cannot engage effectively with their study material.

This has serious implications for the students’ retention and the institutions’ throughput.

“This also poses a major instability risk to universities, as students begin to consider protesting about the problem,” Matutu said.

Non-payment of full accommodation costs, she said, also plunges students into debt with dire implications for universities.

“Some institutions have had to step in by providing meals to students affected by non-payment of allowances, with obvious financial implications on their budgets. So, this is a major concern to vice-chancellors,” she said.

Matutu was responding to Daily Maverick after a decision was taken by Higher Education Minister Blade Nzimande on 11 April to dissolve the National Student Financial Aid Scheme (NSFAS) and place it under administration at a time when many beneficiaries face non-payment issues.

NSFAS board chairperson Ernest Khosa resigned before Nzimande announced the decision.

Khosa was allegedly linked to irregular tenders that were awarded by NSFAS to four fintech service providers – eZaga Holdings, Coinvest Africa, Tenet Technologies and Norraco Corporation – that were appointed to facilitate the direct payment of allowances to students.

Nzimande appointed Freeman Nomvalo as the administrator of NSFAS.

Read more in Daily Maverick: Minister Blade Nzimande dissolves NSFAS board while non-payment troubles still plague students

Another concern raised by vice-chancellors regarding non-payment of allowances, Matutu said, relates to NSFAS not paying landlords of students from those universities that are part of the NSFAS accommodation accreditation pilot, and that “they are beginning to get agitated and threatening to evict students from their residences”.

The NSFAS accommodation accreditation pilot project was launched this year. Under the project, NSFAS handles accreditation for student accommodation to ensure students have adequate housing, but it has already faced considerable criticism. 

Finding solutions

Matutu said USAf does engage with Nzimande’s department and NSFAS from time to time on all NSFAS-related issues including the non-payment of student allowances.

The last discussion, involving NSFAS acting CEO Masile Ramorwesi and another senior official, took place at the USAf board meeting on 19 March.

The USAf board also met with Nomvalo on 16 April to brief him on NSFAS-related issues on USAf’s agenda, including the payment of allowances.

Matutu said a meeting is planned in May between USAf, the department and NSFAS.

She said the department, “via USAf, has also been monitoring the payment of allowances since the universities have been asked to pay allowances from April to July”.

On USAf platforms, she said vice-chancellors talk in general terms about students affected negatively by the non-payment of allowances.

“We do believe that discussions taking place within institutions, especially within the Registrars’ and Chief Financial Officers’ offices, do concern themselves with the numbers. We have not surveyed/collated numbers of unpaid students in the system, so we cannot provide the statistics.”

Interventions

Matutu said NSFAS issued a communiqué on 12 April requesting universities to take over payment of allowances from the fintech companies from April to July.

“While this is what universities had always wanted to do (and they did it successfully at the beginning of the year with February and March allowances), vice-chancellors were duly concerned about the April payments.”

At the time of handing over to universities, Matutu said some students had already received their allowances from the direct payment service providers and others had not.

“Some had received inadequate amounts. Reconciling the data to differentiate those already paid from the rest, and to feed that data to universities in time, was going to be tricky for NSFAS.”

She said universities could foresee some students being double paid for April.

“Regarding May onwards, there is no major issue – except that universities wish to continue paying the allowances for a minimum of the next six months, ideally for the rest of the year, for continuing stability of the sector,” she said.

Asked which universities were currently affected, Matutu said all universities have large numbers of NSFAS-funded students, so the problem cuts across the sector.

Students’ position

Although he could not confirm the number of affected students, South African Union of Students (Saus) president Yandisa Ndzoyiya said a large number of students suffered after the fintech partners were appointed to make direct payments to students and the subsequent decision that was taken by NSFAS to terminate them. 

Saus represents student representative councils (SRCs) in the higher education sector including technical vocational education and training colleges (TVETs).

NSFAS announced in October 2023 that contracts with four fintech service providers would be terminated.

This followed an investigation conducted by Werksman Attorneys and Advocate Tembeka Ngcukaitobi SC in August 2023 that found a conflict of interest involving former CEO Andile Nongogo.

In part, Nongogo was found to have actively participated in the presentation to the Bid Evaluation Committee (BEC) of proposals by service providers and appointed a technical adviser to assist the BEC.

Read more in Daily Maverick: NSFAS CEO Andile Nongogo faces axe after ‘conflict of interest’ in appointment of payment providers

On almost all campuses, Ndzoyiya said students have expressed their dissatisfaction with the process. He said they were worried about the outstanding transfers because there were students who wrote their first-semester tests without food.

“Some students have been evicted by landlords and some suffer based on transport. But we are hopeful that things will change since the minister gave back the process to universities until July,” Ndzoyiya said.

As Saus, he said they have engaged with Nzimande.

“It was our idea to take the process back to universities,” he said.

He added: “We have further engaged with the former board chair [Ernest Khosa] to fast-track the termination of the fintech contracts. We also met with the administrator to stress the importance of the termination,” he said.

NSFAS and the department, he said, had agreed on the process. He said students’ allowances have not been paid in almost all areas.

“Landlords have not been paid and students have not received allowances – both study material and living allowances.”

Daily Maverick approached universities last week to get an idea of the impact of non-payment and the number of students affected. However, few universities responded to questions.

Vaal University of Technology

Vaal University of Technology financial aid manager Busi Radebe said they paid 1,706 food allowances and 235 book allowances for outstanding April allowances that were unpaid by the fintech company appointed by NSFAS.

“The institution will also disburse student allowances from May to July 2024 as requested by NSFAS,” Radebe said.

She said financially deserving students are deprived of full funding support on time and this impacts negatively on their academic performance.

“They attend classes with empty stomachs and without prescribed books,” she said.

The university, Radebe said, has been in numerous engagements with NSFAS in an attempt to resolve the students’ impasse. 

“The institution initiated the food parcel drive jointly with its partners to provide food parcels to some needy students, whilst engaging NSFAS to fast-track resolving funding decisions of the affected students.” 

She said numerous meetings were held with NSFAS, the fintech company disbursing to VUT students and the SRC in an attempt to resolve the challenges. 

“VUT provided office space for the fintech company to resolve challenges of students in accessing their funds.”

Radebe said NSFAS indicated that there are legal proceedings underway with the four fintech companies. In the meantime, she said universities are requested to disburse students’ allowances until July 2024. 

“VUT requested a remittances and exceptions report from NSFAS to ensure outstanding allowances are disbursed correctly and to eliminate overpayment of student allowances.”

Radebe added: “Dissolving [the] NSFAS board, as the strategic committee, has [a] serious impact on the operations of the university, and it threatens the stability of the institutions. This decision will delay payments to institutions and students.”

She said VUT tuition and residences are partially paid to date and this impacts the university operations and cash flow.

“Again, VUT is one of the pilot institutions for student accommodation. Private property owners are not paid rental fees for three months and they are struggling to provide the required services to students.”

Sedibeng Municipality, she said, switched off electricity for some property owners due to non-payment of services.

Radebe said the university had to intervene and ask the municipality not to cut the power because this would have a detrimental effect on teaching and learning. 

“The university took the initiative to issue letters to property owners’ service providers advising them that NSFAS is in the process of effecting payment to the property owners. Therefore, they must not terminate their service.”

The letters were for wi-fi, banks and student transport providers contracted with property owners.

She said the institution also held numerous meetings with the property owners, SRC and NSFAS officials on the challenges to ensure the smooth running of the institution.  

North-West University

North-West University (NWU) spokesperson Louis Jacobs said they paid allowances on 18 April to 6,619 students who had not received their April allowances from the service provider.

“Currently there are still 549 students who have not received allowances. They are mainly students who were recently approved by NSFAS and students who have not yet made an option regarding private accommodation or travelling allowances,” Jacobs said.

He said NSFAS made an upfront payment on 12 April to the NWU to allow the payments to be made.

“NSFAS has instructed institutions to process catch-up payments for April’s allowances and has requested them to continue disbursing allowances until July 2024. Additionally, NSFAS has provided an upfront payment to NWU to cover these expenses,” he said.

He said monthly living and travel allowances are crucial for students.

Sol Plaatje University

Sol Plaatje University spokesperson Kashini Maistry said they were still reconciling the information received from Coinvest to identify unpaid students.

“Currently the academic programme is continuing uninterrupted. Allowances for February and March were paid by the university,” Maistry said.

She said April allowances were paid in part by the NSFAS service provider and that the completeness of this payment is currently being verified. 

Maistry said NSFAS has now requested that universities continue paying student allowances until July and advised that payments were made to institutions in this regard. This is currently being verified by the department. 

She said they have several food security and social relief programmes in place to assist struggling students.

Communication between NSFAS, the university and other relevant stakeholders is ongoing.

“Students who encounter problems are assisted through various university initiatives and programmes,” she said.

Stellenbosch University

Stellenbosch University (SU) said in a statement that there were currently about 5,000 registered NSFAS-funded students, although this number is subject to change as NSFAS makes funding decisions.

Most of these students, SU said, have received their allowances.

“Those who have not have either not accepted the funding, or have not yet confirmed their living arrangements which will determine the type of allowance they will receive. The university has processed allowances as requested by NSFAS,” SU stated.

Wits, UWS and UJ

University of Witwatersrand spokesperson Buhle Zuma said the majority of Wits students are receiving their stipend directly from NSFAS.

“The university, at the request of NSFAS, has agreed to pay the affected students their allowances until July 2024. Other NSFAS payments to the university are up-to-date,” Zuma said.

University of the Western Cape spokesperson Gasant Abarder said all qualifying students received their allowances.

“There is no current impact as we received funding and transferred the funding to the qualifying students,” Abarder said.

University of Johannesburg spokesperson Herman Esterhuizen said all their 2024 NSFAS-funded students have received their allowance up to April 2024.

NSFAS responds

Without responding to specific questions sent on 22 April, NSFAS said in a statement on Friday 26 April that it was mindful of challenges experienced by university students.

NSFAS said it will pay TVET students directly from May.

“University students will continue to receive their allowance through their institutions until the end of July 2024,” NSFAS wrote.

Students who were paid on the direct payment platform by the fintech companies until April, NSFAS said, should continue to use those funds.

“The new arrangement is only from May onwards; more communication will be sent on the off-boarding process,” the statement reads.

NSFAS said Nomvalo convened an urgent meeting with the leadership of the South African TVET Student Association on 23 April, which dealt with students’ increased unhappiness with the delays in the payment or non-payment of allowances, and the disappearance of allowances in students’ accounts.

In the meeting, NSFAS said students expressed serious concerns about the efficacy of the current mode of disbursing allowances.

“NSFAS has devised a payment mechanism to address these ongoing challenges with the assistance of its banker, which will be implemented for the payments that are due at the end of May 2024.”

In terms of the mechanism, NSFAS will distribute allowances directly to students’ bank accounts.

“All TVET students who do not have bank accounts are encouraged to open accounts with banks of their choice,” NSFAS wrote. DM