R5 billion paid out to students who didn’t qualify for Nsfas, Parliament told

Billions of Rands have been paid out to students who weren’t eligible to receive money from the National Student Financial Aid Scheme (Nsfas), according to the Special Investigating Unit (SIU).

The SIU launched its Nsfas investigation into alleged corruption, maladministration, and the allocation of loans, bursaries and any other funding payable to students in September last year, after receiving the green light from President Cyril Ramaphosa to probe the matter.

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The investigation permits the SIU to pursue any applicable civil action, including action involving the cancellation of agreements, recovery of losses or undue payments made due to financial mismanagement.

The unit is also allowed to provide recommendations for possible disciplinary actions or refer criminal matters against implicated parties to the National Prosecuting Authority (NPA).

The SIU investigation, which could cost an estimated amount of R70 million, is looking at allegations between April 2016 and August 2022.

Non-qualifying student payments

Briefing Parliament’s Standing Committee on Public Accounts (Scopa), the SIU’s chief national investigations officer Leonard Lekgetho indicated that the unit estimates that the probe would take approximately 18 months to complete.

“We are currently looking at incorrectly funded students, Nsfas financial management systems where we are looking at four projects, and the close out reports per institution, which relates to overpayments to institutions,” he said.

Lekgetho said some students were awarded the Nsfas bursary despite not submitting their parent’s details upon application.

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Only students whose annual household income is under R350 000 qualify to receive funding.

“We have interviewed several affected students and parents to obtain addition information. Some students admitted that they did not qualify to receive the Nsfas funding,” the SIU official explained to the committee during the meeting.

“We are looking at students one-by-one so that we can able to see at what point each student did not qualify so that we can be able to determine when and how much [these] students are supposed to pay back. We also looking at the employment status of the students.”

Watch the meeting below:

He revealed that R5.1 billion has been paid out to just over 40 000 non-qualifying students across 76 tertiary institutions in the country.

Lekgetho also said it was, however, too early into its investigations to point out the specific flaws and weakness identified in Nsfas’ IT and financial management systems as well as in procurement related matters.

“Once scoping is finalised more details will be reported on. Investigation has commenced, but is at an early stage considering the amount of scoping involved.”

Overpayments

Letgetho further informed Parliament that Nsfas had failed to come up with and implement measures to ensure that the funds paid to the institutions matched the allocation of funds to students.

This failure led to overpayments and underpayments to the different institutions from 2017 to date.

“However, they have recently appointed a service provider to assist them perform this reconciliation in a process called close out reporting.”

At this stage, only three institutions in Mpumalanga and Western Cape have deposited R38.8 million into the SIU’s trust account that was due to Nsfas as a result of overpayment.

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Other institutions are still being verified to identify whether they owe Nsfas or vice versa, according to Letgetho.

“We approached the institution to say we understand that based on our allocation that such money was paid to you over a period of time and as a result this is money that you need to pay back to Nsfas because some of the students did not study at the institution or they left before they could complete their studies,” he explained.

“All along the money was sitting in an interest-bearing account and the moment we come, they quickly pay the money back to Nsfas.”

Observations and risks

Lekgetho further revealed that the SIU so far in its investigations has observed that it was difficult for Nsfas to identify fraudulent applications for student loans or bursaries in the past, because the agency did not have access to systems such as the South African Revenue Service (Sars) and the Department of Home Affairs.

“At this stage it seems that there is an improvement in their access to such information – which puts them in a better position to verify the accuracy of the representations made in the applications.

“Inherent weaknesses and flaws in IT systems has prevailed. Systems are vulnerable and can be hacked with relative ease, resulting in the creation of fictitious students, payments being made to such fictitious students or to unauthorised persons,” he continued.

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He added that the investigating unit has identified historical problems with the payment of landlords for student accommodation.

Meanwhile, SIU CEO Andy Mothibi highlighted some of the challenges faced by the unit during its investigation.

This included the possible lack of co-operation from relevant officials and destruction or loss of relevant documents.

The intimidation of witnesses was another risk, as well as whether the defendants would not be able to pay for civil recoveries.

“It’s important to note that we do put in measures to ensure that the risks are mitigated,” Mothibi said.