EDITORIAL | New allowance payment system has failed students NSFAS is supposed to help

The National Student Financial Aid Scheme (NSFAS) — which exists to help poor students who would not be able to study without its support — has made a drastic change to the way it operates, causing not only great confusion but also sparking new violence on our campuses. NSFAS, which the department of higher education funds, has awarded four companies contracts to pay allowances to students, instead of trusting universities to make the payments on behalf of NSFAS. The rollout of this new system has hit several obstacles, causing at least four universities to shut down face-to-face lectures as protesters voiced their anger.

Universities have bemoaned the new direct payment system, saying it is worse than the previous one where the institutions received the bursary money from NSFAS. In the previous set-up, the universities paid the students their allowances directly. This was a simple process that made sense, while the new system overcomplicates matters and leaves a lot of room for mistakes. In the new way of doing things, NSFAS still pays the universities their tuition fees, but when it comes to the student allowances, NSFAS has now added another layer. It pays a fintech company the student allowances, which pays the students. In practice, however, thousands of students did not receive their allowances. Meanwhile, those who did receive the money have been slapped with all sorts of extra costs.

It completely defeats the purpose of NSFAS, created to provide financial support to students from poor and working-class families. To quote North West University (NWU) SRC president Yikumba Andreas: “NSFAS is supposed to be for students who are less privileged and who don’t have a lot. By charging students such high fees, we can clearly see that NSFAS or whoever is involved in the direct payment process doesn’t have the best interests of students at heart.” It is hard to disagree with him.

We can clearly see that NSFAS or whoever is involved in the direct payment process doesn’t have the best interests of students at heart.

—  Yikumba Andreas, North West University SRC president

The Sunday Times reported at the weekend the four companies that won the renewable five-year contracts — Tenet Technology, eZaga, Norraco Corporation and Coinvest Africa — will rake in millions of rand from the deal to pay allowances to NSFAS beneficiaries at 26 universities and 50 Technical Vocational Education and Training (Tvet) colleges. According to calculations — based just on the 360,771 university students who have so far been “on-boarded” to the new payment system — the four companies will score R4.3m a month through a R12 banking fee deduction from each student’s R1,650 allowance.

Unhappiness about the additional costs to their own pockets, not to mention those who did not receive their allowances, spilled onto NWU, the University of the Free State, Vaal University of Technology and Durban University of Technology. It is ironic that NSFAS, the institution whose resources were significantly beefed up after the legendary Fees Must Fall protests from a few years ago, is now directly to blame for a new wave of student protests. 

The chairperson of the NSFAS board, Ernest Khosa, at a briefing on Monday claimed cyber attackers had targeted the websites of the fintech companies with the intention to steal student data and intercept allowances. He said law enforcement authorities were looking into the matter. It’s an unfortunate development, a risk one would have hoped would have been pre-empted by these companies.

Explaining the reasoning behind the move, Khosa said several consultations with universities were held about the introduction of the new direct payment system. Often, he said, students were paid late by the universities when NSFAS was still paying the tertiary institutions directly. However, universities canvassed by the Sunday Times had a different view.

Either way, the poorest of the poor are losing out, again. And all students on the affected campuses are losing out on the benefits of face-to-face lectures. Our campuses house future leaders, those who bring hope to our nation. This is the last place where there should be instability and uncertainty. NSFAS needs to urgently identify the weaknesses in this new system and fix it, before NSFAS Must Fall protests become the new reality.