The Deepening Crisis of NSFAS: R60 Billion in Irregular Expenditure and Administrative Failures

The National Student Financial Aid Scheme (NSFAS), a lifeline for many South African students, has come under severe scrutiny after the Auditor-General (AGSA) revealed a staggering R60 billion in irregular expenditure between 2019 and 2023. The report, presented to Parliament on December 4, 2024, sheds light on the mismanagement and administrative chaos that has plagued the organization for years.

NSFAS, which is supposed to provide funding to financially needy students in the country, has been unable to account for billions of rands due to poor governance, lack of clear eligibility criteria, and systemic failures in its administration. Despite its crucial role in supporting South Africa’s higher education landscape, the agency’s mismanagement has undermined its core mission, leaving students and taxpayers with the burden of uncertainty.

A Year of Delays and Irregularities

The delayed presentation of NSFAS’s 2022/23 annual report — a full year late — highlights the severity of the issue. AGSA’s Western Cape deputy business unit leader, Thomas Mamogwe, pointed to R60 billion in irregular spending between 2019/20 and 2022/23, with over R25 billion flagged in 2019/20 alone. The irregularities were primarily related to disbursements made to students and the controversial direct payments system.

One of the most concerning revelations was the lack of clear eligibility criteria for students applying for funding. In 2019/20, NSFAS’s failure to establish clear criteria for who qualified for funding led to the entire budget being marked as irregular. The confusion around eligibility, especially regarding family income thresholds, meant that students received funds without proper vetting, which led to billions in improper payments.

Failed Systems and Administrative Dysfunction

Alongside these financial missteps, NSFAS has struggled with chronic administrative issues, especially within its IT infrastructure. Despite a R160 million investment in system upgrades in 2021/22, NSFAS’s outdated IT systems continue to cause delays and errors in processing student applications and disbursements. The systems are reportedly incapable of handling the volume of applications, leading to inaccurate data, incomplete records, and significant delays in processing.

The consequences of these failures are severe. AGSA senior manager Ignatius Fourie highlighted that more than 195,000 funding appeals were lodged in the 2023 academic year alone. With a capacity shortage and inefficiencies in handling these appeals, students are left in limbo for extended periods, with some appeals remaining open for as long as 464 days. In the meantime, many students face delays in receiving vital funding, further exacerbating their financial struggles.

The Dysfunction of NSFAS’s Governance

Governance issues have also contributed to the mess at NSFAS. The agency has been without a board since early 2024, after the previous board was dissolved due to its inability to submit corrected reports and address the organization’s various deficiencies. While Minister of Higher Education and Training, Dr. Nobuhle Nkabane, has promised that the appointment of a new board is in its final stages, the delay in resolving this issue has only compounded NSFAS’s problems.

The absence of proper leadership at the helm of NSFAS, combined with the inadequate administrative resources and staffing, has left the agency unable to function effectively. NSFAS’s administrative budget, which constitutes just 0.7% of the overall funding, is clearly insufficient to meet the demands of managing such a critical national scheme.

The Bigger Picture: Public Ignorance and a Failing System

While the financial and administrative problems at NSFAS are staggering, they are part of a larger trend of mismanagement in South Africa’s public sector. As public funds are misappropriated, the general public often remains indifferent or unaware, with many turning a blind eye to the deepening crisis. This “culture of unaccountability,” as noted by Auditor-General Tsakani Maluleke, means that while billions are squandered, no one is held accountable.

In the meantime, those who should be benefitting from NSFAS, the students, continue to bear the brunt of this mismanagement. As the system continues to flounder, there are growing concerns that the funds set aside for the country’s most vulnerable students will run dry, forcing reliance on private donors to fill the gap.

Some may argue that South Africa’s national ship is not sinking but has already reached the ocean’s bottom, with sharks controlling the resources. The state of NSFAS serves as a stark metaphor for the country as a whole: a place where corruption, inefficiency, and disregard for the public good are rampant, while the voices of those who suffer remain largely ignored.

The Way Forward

There is no easy solution to the problems plaguing NSFAS, but the country cannot afford to continue on its current path. To ensure that future generations have access to the education they deserve, reforms are urgently needed. The first step is to hold those responsible for the irregularities accountable and to establish a functioning governance structure that can effectively manage the funds allocated to higher education. Moreover, a major overhaul of NSFAS’s IT systems and administrative practices is necessary to prevent future delays and errors in the disbursement process.

Until these issues are addressed, the South African public must remain vigilant, demand transparency, and hold the government accountable for the billions being lost in mismanagement. Education is the key to the country’s future — and without proper investment in institutions like NSFAS, that future remains uncertain.