NSFAS stabilisation progress since Administration

Video  (Part 1) Video (Part 2) The Portfolio Committee on Higher Education and Training met to receive an update from the Minister of Higher Education and Training, the Department and the NSFAS Administrator on progress in stabilising NSFAS under administration. The engagement took place against a backdrop of persistent failures affecting student funding, accommodation, institutional payments, appeals, ICT systems and historical reconciliation, but also against evidence of measurable progress since the administration commenced. The central concern emerging from the meeting was that while operational stabilisation had improved in several areas, NSFAS continued to face a structural funding crisis that threatened to undermine those gains and could carry directly into the 2027 academic year. The Minister acknowledged that the work of stabilising NSFAS was incomplete but said meaningful progress had been made, particularly in ensuring the timely payment of student allowances, addressing close-out reconciliation, improving appeals processes, strengthening audit and risk structures and implementing the stabilisation plan. He stressed, however, that NSFAS's difficulties could not be viewed solely as institutional failures. The underlying funding problem had become systemic, with the demand for student funding growing beyond the resources allocated to meet it. The Minister linked the escalating shortfall to increased student numbers, the equalisation of TVET allowances, rapidly rising accommodation costs and recurring second-semester funding requirements at UNISA and universities of technology. He argued that South Africa therefore needed to confront the sustainability of the current student funding model rather than repeatedly responding to the consequences of an expanding gap. A significant part of the Committee's scrutiny concerned the statutory and financial arrangements underpinning the administration itself, particularly the requirement for concurrence from the Minister of Finance. The Minister confirmed that the Administrator had been appointed with effect from 4 May 2026 in terms of sections 17A to 17D of the NSFAS Act and that the appointment had been published in the Government Gazette. The appointment itself was distinct from the determination of the Administrator's remuneration and conditions of service, which required concurrence from the Minister of Finance. However, that concurrence had not yet been finalised despite the Administrator having been in office for approximately three months. Members questioned the basis on which the Administrator had been operating during this period and who would ultimately carry responsibility for the financial consequences should the required concurrence not be granted. The Minister acknowledged that the legislation appeared not to have adequately anticipated the circumstances and undertook to report back once the process had been concluded. The Committee's concern became more acute about the four advisors appointed to support the Administrator. While the Minister confirmed that he had agreed to the appointment of the advisors, he also confirmed that the remuneration of those advisors had not received the approval of the Minister of Finance. Members drew attention to section 17C of the NSFAS Act, which provides for the determination of remuneration and allowances payable to the Administrator and any other person appointed in terms of section 17B with the approval of the Minister of Finance. The Committee therefore questioned the basis on which the advisors had been remunerated in the absence of that concurrence. They sought clarity on whether their payments were lawful and who would be accountable should the requisite approval ultimately not be granted. The issue was further complicated by evidence that some advisors had been paid through companies and others through payroll, with the NSFAS Chief Financial Officer indicating that he had not been consulted and would have advised that the payment arrangements were inconsistent with the founding legislation and the PFMA. National Treasury subsequently confirmed that the Minister of Finance had not yet granted the required statutory written concurrence for the remuneration of either the Administrator or his advisors under section 17C, and that the request remained under consideration. The matter therefore remained a significant unresolved governance and accountability issue requiring formal clarification. Members also scrutinised allegations concerning the Administrator's travel, accommodation and vehicle arrangements, particularly in the context of NSFAS's wider financial constraints and the absence, at the time, of clearly defined terms governing such expenditure. Questions were raised about reports of a double hotel booking involving the Pepper Club and the Westin, alleged luxury accommodation and allegations that the Administrator had been using luxury German vehicles. NSFAS confirmed that the double booking had resulted in expenditure being incurred on both reservations after a change was made because the original room was understood to have carpeting. The Administrator said he had not personally made the bookings and had understood that the original reservation had been cancelled, while the official responsible for the bookings confirmed that the cancellation had not been properly processed. The Administrator subsequently issued a verbal warning to the official concerned. Regarding the vehicle allegations, he explained that NSFAS had booked a standard vehicle but that Avis had on occasion upgraded him to a BMW 3 Series because of a pre-existing President's Club membership, which he said predated his appointment and was outside his control. He denied ever requesting business-class flights or luxury arrangements at NSFAS's expense. Members nevertheless stressed the importance of obtaining the underlying booking and expenditure records so that allegations could be tested against documentary evidence and public perceptions corrected where necessary. Members repeatedly returned to the systemic weaknesses that had contributed to NSFAS's instability, with ICT and data failures emerging as a particularly serious concern. The Administrator acknowledged that NSFAS systems did not reliably communicate with those of institutions, resulting in delayed or inaccurate academic information, incorrect funding decisions and students subsequently being defunded and reinstated once accurate information became available. Members argued that these were not merely technical defects, but failures with direct consequences for student registration, accommodation, academic progression and continued access to funding. Particular concern was expressed about the continued outsourcing of the NSFAS ICT function despite the entity having an established internal ICT structure, as well as the extent to which previous interventions had actually resolved the underlying problems. The Committee also questioned what had happened to approximately R119 million provided by National Treasury in two tranches during 2022/23 specifically to address NSFAS's ICT challenges. Members were told that the previous CEO had maintained that the funds had not been used, while information emerging during the administration indicated that the money had in fact been utilised, without NSFAS being able to account clearly for where or how it had been spent, or if the funds had been exhausted before or during the previous administration. Members regarded this lack of accountability as particularly concerning given NSFAS's previous two consecutive disclaimed audit opinions and the difficulty this created in making a credible case to National Treasury for further funding. The ICT funding issue therefore became emblematic of the broader governance problem inherited by the administration: NSFAS continued to experience the same systemic weaknesses despite having previously received dedicated resources to address them, while inadequate records and weak financial controls made it difficult to establish where public funds had gone and if they had achieved their intended purpose. The scale of the financial challenge was underscored by the NSFAS Administrator, who reported an estimated 2026/27 shortfall of R15.01 billion, comprising R13.32 billion for universities and R1.70 billion for TVET colleges. NSFAS also owed universities R10.49 billion in tuition. Although student allowances were reported to be up to date, universities themselves faced substantial unpaid obligations by NSFAS. The Administrator explained that available cash could not simply be released against the outstanding tuition debt because the same funds were required to meet immediate tuition, accommodation and allowance commitments. The Committee nevertheless remained concerned that delayed institutional payments could create a secondary crisis affecting universities' ability to meet their own obligations and that, without a funding intervention, the problem would merely be deferred rather than resolved. The accommodation crisis emerged as one of the most acute manifestations of NSFAS's broader governance and systems weaknesses. The Administrator reported that 62 958 students were living in non-accredited accommodation, while hundreds of students in accredited accommodation had been incorrectly defunded through gap investigations. Although NSFAS had moved accommodation payments back in-house and substantially improved bank verification, Members questioned the reliability of the accreditation system, the treatment of students caught in administrative failures and the consequences of non-payment to legitimate providers. Concerns were also raised about accommodation providers charging widely differing rates for apparently comparable facilities, the role and fees of external solution providers, possible weaknesses in the flow of accommodation payments and the absence of adequate mechanisms to protect students who had been placed in accommodation that did not meet required standards. Members stressed that students could not be expected to carry the consequences of NSFAS's own administrative and systems failures, particularly where non-payment to providers could ultimately affect water, electricity, security and the basic conditions necessary for students to study. The Committee also scrutinised the treatment of appeals and defunded students. Of 105 145 appeals received, 61 819 had been resolved as eligible, while 21 892 had been rejected and a further 21 144 withdrawn or closed. Although only 290 appeals remained trapped in the outstanding-document process, Members remained concerned about the underlying system defect that had repeatedly reset the 30-day document period and effectively kept students in an administrative loop. The Administrator proposed changes for 2027 to ensure that the document period applied only once, duplicate appeals were blocked and appeal status was made clearer. Members nevertheless emphasised that these reforms needed to translate into correct funding decisions and that students should not be defunded and subsequently subjected to the N+ rule where NSFAS's own errors had contributed to their academic difficulties. Significant progress was reported on historical reconciliation and the Close-Out Project, although this too exposed unresolved financial liabilities. All 450 TVET files had been reconciled and all 26 universities had submitted Full Cost of Study information for the 2025 cycle, but only one university had signed the resulting agreement. For the 2017 to 2024 period, extended to 2025, the reconciliation identified substantial overpayments and underpayments across both universities and TVET colleges, with recoveries already made. The Administrator said the methodology had been reviewed by the Special Investigating Unit (SIU) and was sufficiently robust to support quantification and recovery. The major unresolved issue was therefore no longer simply determining what was owed, but finding the resources to settle validated liabilities. The Administrator called for engagement with the Department, Minister and National Treasury on a sustainable settlement strategy, potentially including phased payments that prioritised graduating students. Members also raised serious governance and accountability concerns surrounding the administration itself. Questions were directed at the legal basis and affordability of the four advisors appointed to support the Administrator, the approximately R200 million consultancy allocation, the R35 million increase in the Administrator's office budget and the extent to which external service providers had contributed to the very inefficiencies the administration was established to address. Members questioned if the relevant legislative and PFMA requirements had been complied with, while the Minister defended the administration's progress but accepted that all expenditure remained subject to scrutiny. The Administrator indicated that the legality of certain advisor payments would ultimately require determination through the appropriate audit and oversight processes. The Minister also acknowledged the need to reduce unnecessary dependence on consultants and to rebuild internal institutional capacity where external services did not demonstrably add value. The meeting therefore presented a mixed picture of NSFAS. On the one hand, the administration had achieved tangible improvements in allowances, reconciliation, direct accommodation payments, appeals and internal controls. On the other, the fundamental financial problem remained unresolved, with the R15.01 billion shortfall and R10.49 billion owed to universities posing a direct threat to the sustainability of the system. At the same time, accommodation, ICT weaknesses, incorrect defunding, unresolved appeals, the delayed loan scheme and governance questions continued to expose students and institutions to avoidable risk. The Committee made it clear that stabilisation could not be regarded as complete merely because systems had been redesigned or projects initiated. The real test would be if NSFAS could consistently make correct funding decisions, pay students and legitimate providers on time, reconcile its obligations accurately, protect students from administrative failures and operate within a sustainable and lawful financial framework. The Committee's engagement consequently pointed towards a broader challenge extending beyond NSFAS itself. Government must determine how its policy commitment to student funding can be matched by a sustainable funding model, while NSFAS must demonstrate that the systems, controls and governance structures being introduced under administration will prevent a recurrence of the failures of the past. The immediate priority is to prevent the 2026 funding crisis from becoming a 2027 crisis, secure a credible mechanism for settling validated institutional liabilities, resolve the accommodation and defunding problems, finalise the Close-Out Project and strengthen accountability for the use of public funds. Ultimately, the success of the administration will be measured not by the number of interventions undertaken, but by if NSFAS emerges as a financially sustainable, technologically reliable and accountable institution capable of delivering what students and institutions depend on it to deliver.