NSFAS funding reduction could affect thousands of students next year

More than 208,000 students face being left unfunded by the National Student Financial Aid Scheme (NSFAS) over the next two years because of a projected R13.7bn reduction in university funding by National Treasury. 

A total of 86,712 students next year and 120,976 in 2025 could be affected based on a projected shortfall in funding of R5.5bn and R8.2bn over the two financial years respectively.  

These were the assumptions made by the financial aid scheme’s acting CEO, Masile Ramorwesi, to parliament on Wednesday. 

He based his calculations on the 10% reduction in the budget over the Medium Term Expenditure Framework period.

Influx of new students next year a concern 

The average cost of funding a student, which was R59,807 this year, is expected to increase by 6% to R63,395 next year and R67,199 in 2025.  

NSFAS dishes out financial aid to needy students from poor and working class families. 

It disbursed R33bn to university students and almost R6.6bn to those attending the 50 public Technical Vocational Education and Training (TVET) colleges this year. 

According to Ramorwesi, one of the risks of the funding shortfall will be NSFAS’s inability to fully fund university and TVET students. 

Since November 21, it received 205,752 applications for funding from students for next year. 

Dire implications of reduction in funding

Ramorwesi told MPs they had discussed the implications of the budgetary cuts with the department of higher education numerous times. 

“We emphasised the growing need for student financial support. We indicated that if these cuts are to happen, then we will have to implement other measures which will be possibly to limit the intake of students that we are supporting financially.” 

He said through the higher education department, they also consulted with the Treasury. 

“They indicated they have a challenge of the budget, and [that] savings have to be realised from the different departments. We indicated our position and projections for them to note and consider.” 

Phethiwe Matutu, CEO of Universities South Africa (USAf), which represents the country's 26 public universities, said the department asked them to motivate why university subsidies should not be cut.  

“I provided that motivation to the department’s deputy director-general, and I assume he will be able to use it when negotiating with the National Treasury on why these subsidies should not be cut.”

She said next year’s first-time enrolling students were expected to be about 210,000. 

While the Central University of Technology in Mangaung can only accommodate 4,515 first-time students next year, it received 324,395 applications. 

Matutu said the Tshwane University of Technology received 309,092 applications for 15,105 places, while the University of Cape Town received 92,819 applications for 4,034 places.    

She flagged issues involving NSFAS, such as the lack of information from the entity on the 2024 allowance payment processes and the third party involved. 

“There are outstanding NSFAS matters of 2023 that will roll over to 2024 resulting in demands from students for issues to be resolved, such as allowances not paid.” 

Referring to the “missing middle” students who automatically don’t qualify for NSFAS funding because their annual family income is above the R350,000 threshold, she said there was no national system for funding them. 

Matutu said student debt was standing at about R16.5bn and that it needed a national solution. 

“It [student debt] is also a source of student anguish and upheaval at the beginning of each year.” 

She said the universities of Stellenbosch, KwaZulu-Natal, Limpopo, Western Cape, Pretoria, Zululand, Walter Sisulu and the Vaal University of Technology had reported a shortage of accommodation for next year. 

Students’ union demands answers

Lukhanyo Daweti, secretary-general of the South African Union of Students, said the union “foresees  a nightmare in January registrations” around student accommodation at both universities and TVET colleges.   

He said funding for “missing middle” and postgraduate students remains unresolved. 

He also asked for clarity on the issue of the termination of the contracts of the four service providers, eZaga Holdings, Tenet Technology, Norraco Corporation and Coinvest Africa, that were contracted to pay allowances directly into students’ bank accounts. 

A damning report by Werksmans Attorneys and advocate Tembeka Ngcukaitobi recommended that the service providers’ contracts be terminated. 

“Are we continuing [with them] or not continuing? For us to have a smooth registration [next year], we are not in support of the bank charges that come with the solution.” 

The service providers levied a R12 monthly fee on NSFAS beneficiaries using the bank account as well as fees for making withdrawals and purchases. 

“For us to have a peaceful year next year there ought to be an increase in student allowances. Otherwise, if that is not resolved, we are going to have a nightmare come January.” 

Union calls for increase in monthly allowance

Daweti said the higher education portfolio committee must support the call for an increase in the student allowances for meals and travelling. 

Students receive a monthly allowance of R1,650. 

NSFAS board chair Ernest Khosa said the Werksmans report was very clear that the termination of the service providers’ contracts should be done in a responsible way and that “the guiding principle is that students should not be disadvantaged in the process”. 

“We did meet USAf last week and indicated to them we will come back on how this should be done.  We are dealing with this as a sensitive matter and we are aware that we will face some resistance,” Said Khosa. 

“We view the problems associated with the direct payments system as very, very serious problems. The problems were tantamount to pitting the youth against the state. It’s something we shouldn’t allow.” 

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