The National Student Financial Aid Scheme (NSFAS) has asked law enforcement agencies to investigate cyber attacks that targeted the websites of fintech companies contracted to pay allowances directly into students' bank accounts.
NSFAS board chair Ernest Khosa addressed a media briefing on its new direct payment system and the defunding of undeserving students in Pretoria on Monday.
This comes in the wake of a huge outcry from students over the controversial system which sparked a march to the Union Buildings last Wednesday.
North West University, the University of the Free State and Vaal University of Technology were forced to close their campuses for in-person lectures last week after student protests over excessive bank charges levied by the fintech companies under the new system.
Deductions from students’ monthly allowance of R1,650 includes a standard R12 for banking fees and a charge of R10 for ATM withdrawals plus R2.50 for every R100 withdrawn.
Previously, the allowances were paid by the universities or service providers contracted by them.
NSFAS, which is funded by the department of higher education, provides bursaries to students from poor and working class families. To qualify, a student’s combined annual household income must not exceed R350,000.
The scheme awarded five-year renewable contracts to Tenet Technology, eZaga, Norraco Corporation and Coinvest Africa to pay allowances directly into the bank accounts of beneficiaries studying at the country’s 26 public universities and 50 Technical Vocational Education and Training (TVET) colleges.
Khosa said the accounts of students are hosted by the four firms and there was no doubt the cyber attacks were intended “to steal students’ data and intercept allowances and render the new system unsafe”.
“Nsfas is investigating such cases. We have alerted law enforcement agencies of such activities.”
We are therefore worried that the disturbances are attributed to an insinuation that NSFAS is imposing a system that has not been properly canvassed with all relevant stakeholders. We pride ourselves in being an organisation that promotes accessibility and consultation.
He said the issue of direct payments “was not initiated by us and it was something we found on the table” when they took over the board.
“It made a lot of sense and we adopted it.”
Between September 2021 and September 2022, NSFAS CEO Andile Nongogo met stakeholders, including Universities South Africa and student organisations and others, to discuss the introduction of the new direct payment system.
“These matters, including us taking over student accommodation, were introduced to vice-chancellors of universities.
“We are therefore worried that the disturbances are attributed to an insinuation that NSFAS is imposing a system that has not been properly canvassed with relevant stakeholders. We pride ourselves in being an organisation that promotes accessibility and consultation.”
Khosa said: “Often we did not have complete sight of payments made to students [by institutions], and this brought [in]to question controls NSFAS put [in place] to ensure money has been paid to the student or is in the student’s account.”
NSFAS beneficiaries have been receiving the correct amount for allowances based on registration data and claims submitted by institutions.
According to Khosa, one of the most pressing problems they experienced in the past was students would be paid late “even though funds were deposited in the account of the responsible institutions”.
“But we have never seen the level of protest we are seeing now. That too is instructive.”
He said more than 355,000 beneficiaries, or 86%, have been able to successfully authenticate themselves and receive their allowances.
“We call on the remaining 14% to authenticate themselves so their allowance can be released.
“If we are not firm on authenticating students we run a risk of paying ghost students. We have a system in place, including students providing ID and facial recognition that ensures students are properly authenticated.”
Khosa pointed fingers at institutions, saying they have been non-compliant in submitting registration data. “Registration data is either submitted late or incorrectly and this disarms NSFAS as we can’t pay students whose registration is not confirmed.”
Commenting on the defunding of students, he said they received huge criticism “about how insensitive we have been in dealing with the defunding of students who are not deserving”.
A total of 45,927 students were defunded, but after re-evaluation, funding was reinstated for more than 14,000.
About 31,000 were unsuccessful.
Some of these included first-time students who had a household income of more than R350,000 and returning students not meeting the required academic progression, which is 50% for all registered modules.
“Our position is as soon as we have information that provides evidence applicants have falsified their information, we must take swift and firm action immediately.
“If we don’t do that, we get a governance problem and the blame will be on the board and management.”
Nongogo, when asked whether the banking charges were presented during the tendering process for the fintech companies, said: “Any tendering process goes through multiple stages which includes prices.”
“We put it in our tender that pricing or charges are negotiable and we wanted to negotiate.
“We negotiated bundles on the basis of the type of transactions students would implement. Even post that, we continued to consult student leadership about what are typical transactions. Student leadership cannot form part of the tender evaluation committee.”
Nongogo said they were able to renegotiate terms by going back to the table and saying: “What is the behaviour of students and are some of these transaction types necessary?”
“We are going to continuously review and assess whether this is conducive for our beneficiaries.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.