Nsfas defunds students after R5 billion loss as many complain about new payment system

Many tertiary students have been left unhappy after the National Student Financial Aid Scheme’s (Nsfas) move to cut off funding for their studies.

Nsfas’s decision comes after it emerged earlier this year that the agency spent R5 billion over four years on students who did not qualify for the funding.

A Special Investigating Unit (SIU) investigation revealed that about 40 000 students received funding between 2018 to 2021.

The investigation showed that applicants had falsified their information to unduly benefit from the funding scheme.

‘Remedial process’

To try prevent this happening in the future, Nsfas has confirmed it will now verify information of applicants with the South African Revenue Service (Sars), Department of Home Affairs, South African Social Security Agency (Sassa) and credit bureau.

“Acting upon the findings of the auditor general, our internal compliance processes and the observations of the SIU, Nsfas has initiated a remedial process where a student who is found to have been funded based on incorrect information is defunded instantly,” Nsfas spokesperson Slumezi Skosana said on Monday.

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“This is done to avoid wrongful and illegal allocation of funds to students who fall outside the prescription of our policies.

“Prescriptions of our policies and the law will be implemented firmly and vigorously to avoid among others a repeat of the more than R5 billion that was allocated incorrectly to students since 2016.”

Skosana said the agency, however, had received complaints that some students were defunded incorrectly.

“If such cases are true, this is regrettable. A process of verifying these complaints will be immediately initiated and if proven, remedial action will be taken.”

Direct payment system

Nsfas said it was also seeking to resolve issues over a new direct banking system, which was being handled by four service providers.

According to the agency, the direct system was introduced in order to “ensure accountability on student allowances” and to establish “a better-coordinated system of the transfer of funds to students”.

The scheme cited Sibongile Mani, who had R14 million mistakenly deposited into her account in 2017, as an example.

READ MORE: Nsfas increases students 2023 living allowances

Mani was found guilty of theft last year after spending R818 000 of the funds during shopping sprees.

“Nsfas expects the new system to be not only convenient to students but also to provide for allowances in a manner that is both dependable and predictable to students,” Skosana said.

Some organisations have, however, complained that funds were not received by some of the intended beneficiaries and have raised concerns over high bank costs of the new Nsfas MasterCard.

There was also lack of clarity on how to access the funds, according to South African Union of Students (SAUS) and the South African Students Congress (Sasco).

NSFAS management had an engagement with SASCO to provide updates on the Direct Payment Solution and the defunding of students. #NSFASBankAccount pic.twitter.com/6Lmm9r9AJ0

— NSFAS (@myNSFAS) July 10, 2023

In addition, the Democratic Alliance (DA) has written to Higher Education Minister Blade Nzimande and the Banking Association of South Africa (Basa) over the direct payment system.

“Given the various Nsfas corruption investigations, the failure of an administrator to resolve its challenges, and the fact that SIU investigation findings are still under wraps, surely the minister should tread with caution when it comes to Nsfas,” DA MP Chantel King said.

But Nsfas has since decided to initiate an investigation into the complaints.

“Where the allegations are proven true, appropriate action will be taken,” Skosana said.

“Service providers will be instructed to increase their physical presence at institutions of higher learning so that they can respond directly to student queries on direct payment. There should be an immediate enhancement of explanations on how students can access their funds to avoid delays in the distribution of allowances.”

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