NSFAS is due a major overhaul, but consensus ends there

It’s unusual in South Africa’s fraught political context for there to be consensus on anything. But there is agreement that the National Student Financial Aid Scheme (NSFAS), the mechanism that has funded millions of students into universities and TVET colleges since the mid-1990s, needs to change. Where opinion splits is on what that change should look like.

When I made a suggestion in an interview on Newzroom Afrika that repayments should be managed by the SA Revenue Service (SARS) and should be on a sliding scale depending on income, it understandably landed with a thud online. South Africans face real challenges of unemployment and poverty and are furious about the entrenched corruption that has played out in the NSFAS debacle. And, while I stand by this particular recommendation, I recognise that the corruption in NSFAS has to be addressed before repayment at point of salary would be accepted by the public.

Under administration, again

NSFAS enters the second half of 2026 under its third period of administration in eight years, after Minister of Higher Education and Training, Buti Manamela, dissolved its board amid governance failures. The Public Protector, Advocate Kholeka Gcaleka, has since found evidence of systemic maladministration, describing an entity that has operated in a “near-permanent state of crisis”. Her investigation cites failures in funding confirmations, allowances, appeals and tuition settlements.

The same process uncovered that more than 40,000 students were improperly funded, to the value of R5.1-billion, building on an earlier audit finding that more than 800 deceased beneficiaries were still receiving payouts, alongside payments where households were above the income threshold and students double-dipping with the SA Social Security Agency’s (Sassa’s) Social Relief of Distress (SRD) grant.

Parliament, meanwhile, has moved to summon four NSFAS intermediaries alleged to have earned roughly R559-million from outsourced payment and accreditation functions, particularly around student accommodation. The accommodation part of the grant has been a recurring problem, with NSFAS releasing R1.1-billion in overdue accommodation payments in May 2026 after providers went unpaid for months and students faced eviction.

To be fair, the minister inherited this nightmare and big improvements have been made since the current acting CEO was put in place. NSFAS concluded 2026 funding decisions pretty much on schedule, approved more than a million students, and rolled out a centralised accommodation database.

The number nobody can avoid

What has shifted the debate from “fix the administration” to “rethink the model” is the size of the problem. NSFAS will spend R54.3-billion in 2026/27. This is more than the block grant that the government transfers to run the entire public university system.

It’s also larger than any other individual social grant available in SA. Because NSFAS funding covers not just tuition but accommodation, food and transport, it has become a de facto family income for many of the poorest households in the country, with students frequently supporting siblings, parents and extended family on funds meant to cover their own studies.

Manamela has conceded the point that “The model as it stands now is unsustainable”. The then deputy minister Mimmy Gondwe went further, telling Parliament there was “no longer a need for NSFAS” in its current form, and proposing that universities themselves assess student need and apply directly to the National Treasury for tuition and living-cost disbursements. Finance Minister Enoch Godongwana has estimated this could save about R700-million.

There is thus consensus that change is needed. But the debates as to what replaces it split roughly into three camps.

• Abolish NSFAS and centralise funding at the Treasury. Godongwana and Gondwe’s proposal would replace NSFAS with direct Treasury-to-institution funding, aiming to strip out the administrative layer where corruption and mismanagement have taken root. Whether universities have the administrative capacity to manage such complex grants is, however, doubtful.
• Decentralise to universities, with national oversight retained. The Democratic Alliance has called for this, with spokesperson Dr Delmaine Christians warning that “you can’t keep replacing one dysfunctional system with another dysfunctional system”, and arguing that the centralised mechanism, now managing R54-billion and more than 800,000 students, was never built for its current scale.
• Keep it centralised, but fix execution and scope. Universities South Africa CEO Dr Phethiwe Matutu has pushed back on decentralisation, warning that universities currently lack the legal standing and administrative capacity to assess need and deal directly with the Treasury. Her argument is that NSFAS’ core failure was taking on peripheral functions, accommodation accreditation among them, that it was never resourced to run well.

Where to go from here?

Lots of tough decisions need to be made. Here are suggested ways forward:

• Unbundle tuition support from cost-of-living support. Folding fees, accommodation, food and transport into one instrument is what allowed NSFAS to metastasise into a welfare grant. Separating education-access funding (need-tested, tied to academic progression) from genuine social welfare support (means-tested at the household level and delivered through expanded state or university student housing rather than cash) would target each problem with the right tool.
• Reintroduce income-contingent loans. NSFAS shifted from loans to full bursaries for the poorest bracket after the #FeesMustFall protests, locking today’s spending in as a permanent cost rather than a partially self-recovering one. Expanding income-contingent repayment beyond the “missing middle” loan tier could return some funding to the system over time. Repayments should always be income-based but need to be implemented for all.
• Taper the means test. The current R350,000 household income cliff-edge continues the “missing middle” problem. Families just above the line get nothing, while a sliding-scale subsidy would allocate scarce funds more precisely.
• Improve post-school education alternatives. Manamela has said NSFAS “cannot be the only instrument of access”, pointing to chronic under-enrolment in TVET colleges, which are both cheaper per student and could ease pressure on the university pipeline. Massive improvements in TVET colleges will be needed to achieve this.
• Close the leakage. The Special Investigating Unit has already recovered more than R1.7-billion in misallocated funding, tracing losses to the intermediary “Solution Provider” model and poorly governed agreements with institutions. Whichever administrative structure survives the reform will inherit the same leakage points unless procurement and intermediary governance are fixed independently of the institutional redesign.

The uncomfortable truth is that the sustainable solution and the politically survivable one are pulling in opposite directions. A sustainable NSFAS almost certainly means shifting support from grant to loan and tackling “can you afford to study” separately from “can your family afford to eat”. All of this risks reopening the wounds of #FeesMustFall in a country where poverty and unemployment are increasing.

Whether the eventual reform lands as decentralisation or a rebuilt centralised model, it is now impossible to avoid the reality that a scheme that is bigger than the block funding to universities that it was meant to complement has to be redesigned. DM