Warning over new R3.8 billion fund in South Africa

Universities South Africa (USAF) has warned that the government’s new R3.8 billion student loan policy could overwhelm the National Student Financial Aid Scheme (NSFAS).

With tens of thousands of additional NSFAS applications expected so close to the start of the academic year, “there is a worry that NSFAS could be overwhelmed,” said the CEO of Universities South Africa, Dr Phethiwe Matutu.

“If NSFAS does everything by itself, I think that will be too much,” she said, urging NSFAS and the government to seek administrative support from universities and the private sector in the short time frame before universities reopen.

The umbrella body, which represents the 26 public universities in South Africa, said it has been left in the dark, as universities have not received any details regarding the implementation of the new multi-billion rand scheme despite the Department of Higher Education and Training announcing it to the public.

Matutu said that this poses a huge risk, as students arriving for their studies would expect universities to know the details of the scheme – which they do not.

“For as long as we have not received the details from NSFAS together with the department on how to deal with [students wanting to register through the scheme], the status quo will remain,” said Matutu.

Despite this issue, Matutu said that the body welcomes the new funding, as debt amongst ‘missing-middle’ students has been mounting.

She urged the department to release details of the sustainability of the scheme, as well as begin processing applications.

Less than half of the ‘missing middle’ students (31,884 of the estimated 68,446) whose households have a total income of more than R350,000, but not more than R600,000 per annum, are said to qualify for the new funding.

R1.5 billion of the fund is from the public National Skills Fund (NSF), and R2.3 billion is from the private Sector Education and Training Authorities (Setas).

Between 2019 and 2022, NSFAS disbursed R123 billion worth of loans for 2,918,624 beneficiaries who fall in the low-income category.

NSFAS has recently been facing backlash regarding payments to students. At the end of last year, the South African Union of Students (SAUS) accused the funding agency of being on “the brink of collapse” for its issues of late payments of allowances.

SAUS spokesperson Asive Dlanjwa told SABC that students were waiting for payments for months on end.

“As per our estimation, we have at least about 80,000 students who would have written exams. That’s a minimum that would have written exams without food and their necessary necessities, including your toiletries, etc. So it was really a disastrous end-of-year examination period for NSFAS beneficiaries.” said SAUS.

Higher Education Minister Blade Nzimande has said that he had raised his concerns with the board over the allowance matter.

“I have met with the board and emphasised that if Sassa is administering grants to millions of South Africans why then should NSFAS have a problem in properly disbursing funds to about one million students.”

Read: New R3.8 billion fund for South Africa’s ‘missing middle’