Finance Minister Enoch Godongwana has said that if it were up to him, he would scrap the National Student Financial Aid Scheme (NSFAS).
NSFAS was established in 1996 as the South African government’s student financial aid scheme to provide support to undergraduate students.
This financial aid is designed to help students cover the cost of higher education after high school.
It is funded by the Department of Higher Education and Training and administers scholarships such as the Funza Lushaka Teacher Bursary.
Problems plague the agency, including mismanagement, corruption, and other governance problems.
Last year, the Auditor General of South Africa (AGSA) revealed that NSFAS had committed nearly R60 billion in fraudulent expenditures.
“NSFAS has long suffered from mismanagement, leaving students vulnerable and underserved,” said DA higher education spokesperson Matlhodi Maseko.
Many students wait months to receive benefits or scholarships, leaving them in a financially unstable situation.
The Organization Bringing Back Tax Abuse (OUTA) said failure to manage funds responsibly will harm unemployed youth and South Africa as a whole.
Tender irregularities were highlighted, including contracts with service providers without banking licenses, excessively high bids, and weak supply chain compliance.
In April 2023, the Special Investigations Unit (SIU) discovered that more than R5 billion in NSFAS funding may have been allocated to ineligible students.
An SIU investigation has revealed that more than 40,000 students at 76 higher education institutions may have received fraudulent funding.
The agency also faces a number of leadership challenges, including the dissolution of the board, resignations, and investigations into senior staff.
South African Finance Minister wants to close NSFAS
Finance Minister Enoch Godongwana said the National Student Financial Aid Scheme would be scrapped if possible.
But he said there are many vested interests that protect the agency despite its problems and inability to carry out its mission.
“If I had the option to eliminate National Student Financial Aid, I would turn a blind eye and do it. It would be abolished tomorrow,” he said.
He stressed that NSFAS’s mandate is to receive funds from the Department of Higher Education and transfer them to universities.
“You don’t need that conduit. You can send the money directly to the university and the university can do the work it needs to do,” he said.
“But we have created this strange thing called NSFAS, where the CEO makes more money than the president of South Africa.”
The situation gets even worse. The agency is so dysfunctional that it has decided to outsource the work that should be done.
“They have hired four service providers to carry out their mission,” Godongwana said.
The Minister of Finance said students and other stakeholders are included in the defense of the National Student Financial Aid Scheme.
It has no purpose and is dysfunctional, but with so many vested interests involved, it is impossible to shut it down.
“If we tried to abolish National Student Financial Aid tomorrow, there would be protests at universities,” he said.
