The National Student Financial Aid Scheme (NSFAS) has clearly lost sight of reality with the introduction of their new, expensive “direct payment” system. Beneficiaries will now use a NSFAS Mastercard, set to be rolled out as of July, which will cost students a whopping R12 per month just for in-bundle costs.
Minister Blade Nzimande introduced the new NSFAS Mastercard in September last year to have “a secure and student-centred approach”, to allowance payments. Which includes the payout of book allowances in the beginning of the year, personal care allowances, travel allowances and living allowances.
Many students and student leadership structures welcomed the idea of direct payments at the time, but the how of the direct payment were vague until recently when NSFAS unveiled the service providers.
In an investigative report by the Organisation Undoing Tax Abuse (Outa) it was found that all four of the providers — Coinvest Africa, Tenet Technology, Ezaga Holdings and Norraco Corporation — are young and unexperienced companies.
In the same report Outa found that much more reputable, experienced and known banks applied for the bid but failed, which raises serious doubt and suspicion as to how four young and unexperienced companies got the bid successfully.
Notably in the report it was also found that the current NSFAS CEO Andile Nongogo had at some point during his tenure as SETA CEO a “business relationship” with a family group who has directorship in Coinvest, which makes reasons for suspicion valid.
WILLIAM SEZOE | NSFAS’s direct payment system: a study on how to fail poor students
How were more reputable and experienced banks that applied for the bid fail? And why would the funding scheme try to reinvent the wheel?
Image: kasto/123rf.com
The National Student Financial Aid Scheme (NSFAS) has clearly lost sight of reality with the introduction of their new, expensive “direct payment” system. Beneficiaries will now use a NSFAS Mastercard, set to be rolled out as of July, which will cost students a whopping R12 per month just for in-bundle costs.
Minister Blade Nzimande introduced the new NSFAS Mastercard in September last year to have “a secure and student-centred approach”, to allowance payments. Which includes the payout of book allowances in the beginning of the year, personal care allowances, travel allowances and living allowances.
Many students and student leadership structures welcomed the idea of direct payments at the time, but the how of the direct payment were vague until recently when NSFAS unveiled the service providers.
In an investigative report by the Organisation Undoing Tax Abuse (Outa) it was found that all four of the providers — Coinvest Africa, Tenet Technology, Ezaga Holdings and Norraco Corporation — are young and unexperienced companies.
In the same report Outa found that much more reputable, experienced and known banks applied for the bid but failed, which raises serious doubt and suspicion as to how four young and unexperienced companies got the bid successfully.
Notably in the report it was also found that the current NSFAS CEO Andile Nongogo had at some point during his tenure as SETA CEO a “business relationship” with a family group who has directorship in Coinvest, which makes reasons for suspicion valid.
What you need to know about the NSFAS bank account rolling out to university students
Nonetheless, each of these companies is mandated to service several universities and colleges, with Stellenbosch University (SU) being one of them.
In a recent meeting with NSFAS officials and Coinvest at SU, a series of questions were raised about how exactly this new system will work, and particularly how much it will cost students.
The costs of the NSFAS Mastercard were shared in this meeting, revealing that students will pay R12 per month with various other costs for out-of-bundle transactions. The cost sheet shows that students will pay about R60 to replace a card and R50 to have it delivered; R8 to have your pin reset; R8 if you card declines at an ATM; and R20 if an ATM swallows your card.
Comparing these prices to other well-known and reputable banks such as Absa, which has a student account with zero monthly fees and free perks such as 100MB data per month, just shows how ridiculously expensive this exercise will cost NSFAS students.
It boggles my mind that NSFAS, mandated to serve the most vulnerable and poor students, would opt for such expensive banking (not that we can call it banks as Outa also found that these companies are not registered as financial service providers) options for students. This while we live in a country where the cost of living is already high.
Now students will have to cut their allowances even more as they will have no choice but to carry the underlying costs of this new system.
What is even more mind-blowing is the amount of money these companies will walk away with after their contracts expire. NSFAS has recently confirmed that it will fund more than 1-million students this year, if you were to do the maths each of these companies will walk away with billions of rand after their five-year contracts have expired.
Why NSFAS would go and reinvent the wheel is beyond me. The simplest solution would have been to pay the money directly to the personal bank accounts of students. I am pretty sure all students already have existing bank accounts of their choice, and if not, a bank account must be one of the requirements to receive NSFAS — that makes more sense than what NSFAS has come up with.
People in general must have the option to choose a bank of their choice, one they want to associate themselves with and can build solid relationships with. This is what we call financial emancipation — it’s not that difficult, but forcing students into this system is not beneficial nor cost-effective.
Charging the already poor and most vulnerable “banking” charges will only create tension and frustration among the student populace and could lead to huge students protests across the country if NSFAS and the minister do not urgently reapply their minds on this system.
• William Sezoe is the Stellenbosch University SRC vice-chairperson and member of the DA student organisation FedEx.
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