It’s time to dismantle NSFAS — the scandal-plagued aid scheme is hurting SA students

The National Student Financial Aid Scheme (NSFAS) was established to play a critical role in ensuring access to higher education for hundreds of thousands of South African students. However, serious governance failures, systemic maladministration and operational breakdowns have severely compromised the futures of marginalised students.

As of mid-2026, the NSFAS remains under administration, and the consequences are stark. Payment backlogs have resulted in academic exclusions, evictions from student housing and prolonged food insecurity, with some left unable to complete their studies or enter the workforce.

The unfulfilled promise of the NSFAS in facilitating equitable access to education has failed the very people it was meant to serve. The NSFAS has suffered from repeated governance collapses and large-scale maladministration. Forensic investigations and Auditor-General audits have repeatedly highlighted irregular tender processes and mismanagement of funds that should have gone directly to student support.

Student unions, civil rights groups, and private housing providers have repeatedly accused the NSFAS of failing to deliver, and broken pledges have frequently led to violent campus protests.

The financial picture compounds the crisis. The total outstanding debt burden across the post-school education system stands at R59-billion, of which NSFAS-funded students account for R29-billion, just under half, according to figures presented to Parliament’s Portfolio Committee on Higher Education.

It is well documented that the NSFAS is perennially consuming the lion’s share of the Department of Higher Education and Training (DHET) budget, taking up well over 50% of the funding previously dedicated to the entire university branch. By contrast, university operational budgets and vital infrastructure projects are consistently squeezed.

We must be pragmatic, as the entire university funding model needs to be overhauled. The eagerly awaited empty promise from the government is not helpful, as South Africa battles the second-highest youth unemployment levels globally and also has the highest Gini coefficient in the world.

The perceived lack of political support to deal decisively with the NSFAS is disheartening, especially when the DHET has success stories, such as Higher Health and the Council on Higher Education, performing world-class services on a shoestring budget.

Removing NSFAS as an intermediary

The push to route funds straight to higher education institutions has gained real momentum amid ongoing governance failures and corruption allegations plaguing NSFAS. Finance Minister Enoch Godongwana supports restructuring the NSFAS. He suggests that the government should bypass this troubled financial aid system and instead send tuition and accommodation funds directly to universities and TVET colleges. This change aims to reduce administrative overhead, eliminate unnecessary outsourcing costs, and address issues of systemic mismanagement.

Additionally, we need to address a significant problem: the NSFAS lacks an integrated data management system with universities and TVET colleges. Currently, it relies solely on these institutions to determine who should be paid and when. The NSFAS then funds universities, which are responsible for distributing the approved amounts to students. This situation is similar to opening a municipal account in Cape Town and expecting the City of Johannesburg to handle all the administration and correspondence with the account holder.

Private higher education students receive no government funding, regardless of their personal financial situation, even if they qualify for NSFAS funding but are unable to secure a space in a public university, where more than 660,000 students compete for 230,000 first-time entry spaces.

We find ourselves in a peculiar situation regarding the “missing middle” students. These individuals come from tax-paying households but lack effective means to finance their education. They are too affluent to qualify for NSFAS support and too financially constrained to obtain student loans. Additionally, they often struggle to qualify for any personal or unsecured loans.

I fully support the removal of the NSFAS from the equation, for which I have been advocating for years. Students cannot afford to wait while the scheme continues to let them down.

While student support funding is essential, a bloated bureaucracy benefits no one and should be recognised for what it is. Instead of addressing the systemic and real challenges our students face, we often make excuses that delay necessary action, ultimately harming students without consequence. We all know what needs to be done: NSFAS funds should be paid directly to universities, and the NSFAS should be eliminated.

A further challenge for the minister of finance is that many Sector Education and Training Authorities (Setas) are neglecting their primary mandate. Instead of funding proper skills development that leads directly to employment for levy-paying companies, they are dumping hundreds of millions of rands into university and TVET fee support — unnecessarily duplicating NSFAS funding.

Ministers call time on NSFAS

During the Higher Education and Training budget vote debate in Parliament in May, the outgoing deputy minister of higher education, Mimmy Gondwe, called for the NSFAS to be completely dismantled and replaced with a university-driven funding model, in which institutions assess students’ financial need and apply directly to the Treasury for tuition and living allowance disbursements.

At a post-Budget event in February, Godongwana criticised the NSFAS, noting that the Special Investigating Unit had helped the scheme recover R1.7-billion in misallocated funds from universities, TVET colleges and former students. He argued that the R700-million spent annually on NSFAS administration could instead pay the fees of 9,000 students.

Routing funds directly to institutions would bring more students into the education system and eliminate the wasteful expenditure that is currently swallowing money meant for students.

Outsourcing designated responsibilities

The NSFAS has been involved in fruitless and irregular expenditure, thereby increasing administrative costs. The most recent issue is the outsourcing of student allowance disbursement to third-party fintech service providers, resulting in excessively inflated transaction rates that consumed nearly 4% of students’ allowances while diverting hundreds of millions from direct student aid into operational bloat.

The Western Cape High Court recently voided the contracts with these controversial fintech providers after finding that the tender process that awarded contracts to eZaga, Coinvest, Noracco Corporation and Tenet Technology was riddled with irregularities, including the direct involvement of former NSFAS CEO Andile Nongogo. Since the providers were found not to be complicit, the NSFAS has been ordered to compensate them for the losses incurred, a liability that students and the South African taxpayer will ultimately bear.

The financial stakes are extremely high. The NSFAS is unsurprisingly facing another potential budget shortfall of R10.46-billion for the 2026/27 financial year, despite a current budget allocation of R54.8-billion. This gap serves as a critical wake-up call for those asleep at the wheel, while universities, TVET colleges, and vulnerable students continue to bear the brunt of these challenges. DM