An OUTA investigation has revealed governance failures, systems weakness in the NSFAS student accommodation model.
Image: Ayanda Ndamane / Independent Newspapers
A two-year investigation has laid bare a web of governance failures, and systemic weaknesses within the National Student Financial Aid Scheme (NSFAS) student accommodation system, putting billions of rands in taxpayer money and the safety of thousands of students at risk.
The Organisation Undoing Tax Abuse (OUTA) released its findings on Monday, revealing how structural changes to the funding model have introduced multiple "middlemen" into a pipeline that was previously managed more directly by universities. This redesign, according to the report, has created a fertile ground for exploitation and administrative chaos.
The investigation, which stems from documentary analysis, whistleblower disclosures, and records obtained via the Promotion of Access to Information Act (PAIA), paints a grim picture of the centralized student accommodation portal.
One of the most startling revelations involves the accreditation of properties. OUTA uncovered instances where accreditation agents approved buildings that failed to meet the Department of Higher Education and Training’s (DHET) minimum standards. In one egregious case, a property listed as having 200 beds was found to be nothing more than an ordinary three- or four-bedroom house.
Stefanie Fick, OUTA’s Executive Director of Accountability, questioned why NSFAS moved away from functional university systems to outsource critical functions. She noted that when multiple intermediaries are introduced into a pipeline managing billions in public funds, the system becomes dangerously vulnerable if controls are weak.
The financial implications are staggering. Under current service level agreements, four appointed solution providers earn at least 4% of the total amount NSFAS pays for accommodation. OUTA estimates these contracts could cost between R600 million and R1 billion over their duration, funds that the organisation argues are being diverted from actual student housing needs to perform functions that NSFAS should handle internally.
Furthermore, the report highlights that accommodation providers were forced to pay approximately R33 million to register on the portal, while another R230 million was withheld over an eight-month period in 2025 as a "licence fee."
Governance red flags were also raised regarding the procurement of these portal providers. While a bid evaluation committee initially recommended two providers, the NSFAS board ultimately appointed four. This included Training Young Minds, a company that had reportedly been disqualified earlier in the process before being reinstated.
The investigation also scrutinised "off-take agreements", long-term leases of up to 20 years with providers. Despite the scale of such commitments, NSFAS was unable to provide OUTA with business plans or board resolutions supporting the initiative, suggesting a lack of proper oversight.
Perhaps most confusing is the discrepancy regarding the "accommodation shortage" narrative. Data provided by NSFAS itself indicates that at several institutions, the number of accredited beds actually exceeded the number of funded beds. This suggests that either students are being left without housing despite available beds, or money is being allocated to "ghost beds" that exist only on paper.
Rudie Heyneke, OUTA’s senior project manager, emphasised that while many providers are compliant and safe, the governance framework intended to protect public funds is failing. He warned that the reliability of the entire system is in doubt if agents are certifying properties without physical inspections.
OUTA said it will share its findings with the NSFAS board, the Auditor-General, and the Special Investigating Unit (SIU) to push for urgent reform and accountability.
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