The National Student Financial Aid Scheme has been placed under administration for the second time in eight years following a governance collapse marked by board resignations, a disclaimer audit outcome and systemic failures affecting more than one million students.

Higher Education and Training Minister Buti Manamela announced the intervention on Monday, invoking sections 17A to 17D of the NSFAS Act, 1999, to appoint an administrator with a mandate to restore stability and accountability to the R60 billion scheme.

The decision followed what Manamela described as careful consideration of the legal, governance, financial and operational circumstances affecting NSFAS, which administers billions of rands in public funds and determines the educational futures of millions of students.

Why administration was imposed

The minister outlined a series of problems that led to the intervention, beginning with concerns about the legality of the NSFAS board’s constitution. The department approached the courts through self-review proceedings after identifying potential legal irregularities in the constitution of a statutory body entrusted with public funds.

The situation deteriorated with multiple board resignations, including that of the chairperson, and ongoing disputes related to governance processes and executive appointments. The board appeared to be struggling with conflicting legal interpretations of quorum, claims of efforts to obstruct board activities, and accusations of interference in executive appointments.

Attempts to stabilise the board through interim appointments and filling vacancies were deemed insufficient.

The governance crisis was compounded by serious institutional challenges that emerged from NSFAS’s own reports, governance records and responses to the department.

The scheme received a disclaimer audit outcome for the 2024/25 financial year, the worst possible audit result, indicating the Auditor-General could not obtain sufficient evidence to form an opinion on the financial statements.

The Auditor-General also identified material irregularities, pointing to fundamental breakdowns in financial management and compliance.

Further problems included weaknesses in consequence management, meaning officials responsible for failures or irregularities were not being held accountable, and serious data integrity problems that undermined the reliability of NSFAS records and decision-making.

Students bore the brunt of system deficiencies, with unresolved appeals caused substantially by system failures. Delays in ICT modernisation and systems integration hampered the scheme’s ability to process applications and payments efficiently.

Student accommodation failures affected student dignity and safety, whilst broader governance and accountability concerns pervaded the institution.

What happens now

Manamela appointed Hlengani Mathebula as NSFAS administrator, citing his experience, independence and institutional understanding as necessary to stabilise the scheme.

Mathebula brings more than three decades of experience across public and private sectors, including roles in governance, financial management, regulatory and institutional leadership. He currently serves as director and head of the Tshwane School for Business and Society at the Tshwane University of Technology and has held professorial and senate leadership responsibilities within the university sector.

He has also served in executive and governance positions at the South African Reserve Bank, the South African Revenue Service and on the boards of several public and private entities.

The administrator’s mandate focuses on restoring stability, accountability, operational continuity and institutional renewal. Key priorities include strengthening governance and internal controls, addressing audit and consequence-management weaknesses, accelerating ICT and systems integration reforms, stabilising student funding operations, improving student accommodation oversight, resolving appeals and service-delivery backlogs, and preparing the institution for a return to stable ordinary governance.

Manamela reassured that NSFAS operations would continue uninterrupted. Student funding, allowances and appeals processes would continue, whilst universities and TVET colleges would continue engaging NSFAS operationally.

The minister acknowledged the contributions of both former and remaining board members for their service during what he described as a difficult and complex period for the institution.

DA: Students caught in crossfire

The Democratic Alliance described the situation as confirmation that NSFAS faces a deep and ongoing governance crisis and remains under crisis management without a clear, credible turnaround plan.

DA spokesperson on higher education and training Dr Delmaine Christians called on Manamela to urgently account to parliament on steps being taken to restore governance, stabilise the board and protect students from further harm.

Christians expressed particular concern about the apparent breakdown in the relationship between the NSFAS board and the minister, raising questions about governance stability, respect for due process and the independence of key institutional decisions.

The DA noted that alongside board resignations, the board appeared to be struggling with conflicting legal interpretations, claims of obstruction and accusations of interference in executive appointments, suggesting a lack of clarity and unity within leadership.

Christians said the level of instability at leadership level was unsustainable given NSFAS’s existing challenges with weak financial controls, failing ICT and verification systems, and ongoing disruptions to student funding.

The party also raised concerns that leadership appointments might be disputed or perceived as politically motivated, and that internal conflicts were affecting decision-making and potentially harming public confidence.

FF Plus: Scheme has never worked properly

The FF Plus said the repeated administration underlines the need for NSFAS to be thoroughly reviewed or even abolished, echoing an opinion previously expressed by Finance Minister Enoch Godongwana.

FF Plus chief spokesperson on higher education Dr Wynand Boshoff said the R60 billion per annum institution has never worked well since it was transformed from a bursary scheme into a grant scheme.

NSFAS’s troubles began when the relatively small bursary scheme was transformed overnight into a multibillion-rand grant scheme at the end of 2017 without adequate preparation.

Former president Jacob Zuma responded to the violent Fees Must Fall campaign during the ANC’s national conference in December 2017 by promising free higher education for the poor and working class. The Department of Higher Education had to hurry up plans to carry out the promise.

At that time, NSFAS was a bursary scheme that awarded repayable loans. The total budget in 2017 was about R10 billion. Since Zuma’s announcement, it has had to pay tuition fees, accommodation and monthly allowances to a rapidly growing number of students.

NSFAS did not have a chance to prepare for this expansion. It soon became clear that information systems and available personnel could not cope. The institution was placed under administration in 2018, which eventually lasted until 2022.

The scheme now serves about 1.2 million students with an annual budget that has grown to R60 billion, but continues to face governance crises, audit failures and operational breakdowns.

Against this background, Godongwana expressed the opinion in March this year that NSFAS should be abolished instead of repeatedly bailed out.

At the time, three financial technology companies that handle payouts were under discussion. These companies had to develop sophisticated systems which already existed in commercial banks and universities.

Boshoff said it is not always clear whether NSFAS is student funding or social grant in the first place. Many households depend on students’ grants, whilst demand grows every year.

He said successful students should be financially in a position to repay their student debt. The FF Plus has already proposed that NSFAS beneficiaries be placed on the South African Revenue Service’s current payment system, meaning once they earn money, they can repay their student debt.

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The party said the inability of NSFAS to practise good governance at any stage since 2018 makes a thorough reconsideration essential.

Boshoff said the situation proves once again that corporate incapacity cannot be solved by throwing money at it.

Manamela said government remained fully committed to ensuring NSFAS succeeds in fulfilling its mandate to poor and working-class students, and would continue engaging institutions, students, parliament, National Treasury, organised stakeholders and the public as the process unfolds.

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