By Thapelo Molefe

Higher Education Minister Buti Manamela has warned that the National Student Financial Aid Scheme (NSFAS) is facing an estimated R15 billion funding shortfall, saying the growing gap threatens the sustainability of South Africa’s fee-free higher education policy.

Briefing Parliament’s Portfolio Committee on Higher Education on Wednesday on progress in stabilising NSFAS under administration, Manamela said the shortfall had grown from about R2.5 billion in 2018 to R13.5 billion last year and was now estimated at about R15 billion.

“The most significant and I think unresolved issue remains the financial position at the NSFAS,” Manamela said.

He said the funding crisis was largely driven by growing demand for higher education, while the NSFAS allocation was effectively fixed through the Medium-Term Expenditure Framework and did not automatically increase with the number of students qualifying for funding.

“We have a policy to provide free education on the one hand. On the other hand, we have an allocation that is almost set in stone in the medium-term expenditure framework and in the budget for a cycle,” he said.

Manamela said the number of learners progressing from Grade 12 into higher education was increasing, putting further pressure on the student funding system.

He said government needed to confront whether it was prepared to provide the resources required to sustain fee-free higher education.

“We have made a commitment to South Africans that we will provide fee-free higher education, and we have to go and find the money,” he said.

“And if we don’t have that money from the national fiscus or from wherever, we need to rethink our approach towards a fee-free higher education.”

Manamela said the issue could not be treated as a problem belonging only to NSFAS or the Higher Education Department, but required a broader government response.

He said government was already discussing the matter with Finance Minister Enoch Godongwana, while policy proposals were also being developed.

The minister also raised concerns about the current state of NSFAS, which has been under administration since May.

He said the administrator’s initial stabilisation plan had correctly identified systemic weaknesses, including governance, financial controls, data, information and communications technology, audit remediation, accommodation, appeals and stakeholder confidence.

However, Manamela cautioned that the plan should not itself be regarded as evidence that NSFAS had been stabilised.

“Our preliminary assessment as the department is that the plan remains stronger at the level of strategic commitment than at implementation level,” he said.

He said the plan required clearer baselines, costed interventions and measurable milestones, as well as a clear framework for determining when the administrator would be able to exit.

“The test is whether NSFAS is measurably moving from instability towards reliable performance,” Manamela said.

The minister said the administrator had inherited serious structural weaknesses, including unreliable data systems, problems reconciling billing and registration records, accommodation payment challenges and defects in the appeals system.

He said historical reconciliation failures had also affected students’ ability in some cases to clear their accounts, obtain certificates and progress with further studies or employment.

Manamela identified student accommodation as the biggest immediate challenge facing NSFAS.

He said tens of thousands of students were currently recorded as being in non-accredited accommodation and stressed that students should not be punished for structural shortages.

“It is important that we send the message that students should not be penalised or punished for structural shortages,” he said.

“Temporary exceptions cannot become a permanent substitute for minimum safety, for quality and financial control standards.”

He said NSFAS needed a reliable accreditation and deviation database, stronger verification and payment controls, and systems to ensure legitimate accommodation providers were paid on time while students were protected from eviction caused by administrative failures.

Manamela also highlighted the so-called “missing middle” funding gap, saying NSFAS had received about 53,000 applications under the loan scheme, but only about 3,000 had been assessed as eligible.

He said the issue formed part of the longer-term discussion about stabilising student funding.

The minister also addressed concerns about the remuneration of the administrator and the appointment or contracting of people supporting the administration.

He said the administrator was appointed with effect from 4 May under sections 17A to 17D of the NSFAS Act, with the appointment published in the Government Gazette.

However, determining the administrator’s remuneration required concurrence from the Finance Minister, a process Manamela acknowledged had taken longer than it should have.

“The Department and I are engaging with the Minister of Finance urgently to ensure that this matter is finalised,” he said.

Manamela said he had also requested a complete account of the people appointed or contracted to support the administrator, including documentation relating to remuneration, contracts and the legal basis for the appointments.

“Everything that happens at the NSFAS has to happen within the law,” he said.

He said the department remained supportive of the administrator but would ensure that the processes followed in appointing the supporting team complied with the law.

With the next funding cycle approaching, Manamela said NSFAS’s readiness for 2027 would need to be measured against clear milestones covering applications, systems, funding policy, appeals and accommodation planning.

“2027 readiness must also be tested against hard milestones, applications and systems,” he said.

The minister said the administration should ultimately result in the rebuilding and redesign of NSFAS so that it no longer required repeated interventions.

“Administration cannot become NSFAS’s permanent governance model,” he said.

“The purpose of this intervention must be to rebuild an institution that no longer requires an intervention during crisis and therefore an administrator.”

Manamela said the department, NSFAS administration and Parliament should judge the progress of the intervention against that standard.

“Where mistakes have been made, I think they should and must be corrected. And where allegations require investigations, appropriate processes have to follow,” he said.

“The overriding obligation remains unchanged to build an NSFAS that performs its mandate reliably, lawfully, sustainably for the students of this country.”

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