Higher Education and Training Minister Buti Manamela says NSFAS has undergone major reforms, including direct payments and strengthened governance, following SIU findings that uncovered more than R1.7 billion in misallocated funds, while government moves to expand student placement capacity amid rising demand.
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Higher Education and Training Minister Buti Manamela says government has introduced new systems to tighten control over the National Student Financial Aid Scheme (NSFAS) following the recovery of more than R1.7 billion in unused and misallocated funds identified by the Special Investigating Unit (SIU).
IOL previously reported that the SIU had recovered more than R1.7 billion from universities, TVET colleges and students linked to unallocated and misused NSFAS funds.
The recovery forms part of over R2 billion reclaimed to date as the 2026 academic year gets under way, with the SIU attributing the losses to weak control and reconciliation systems within NSFAS between 2016 and 2021.
This comes after Al Jama-ah Member of Parliament (MP) Ismail-Moosa asked what systems had been put in place to prevent future misuse of NSFAS funds, and how government intended to accommodate thousands of students who achieve bachelor passes and distinctions but are unable to secure placement at universities and Technical and Vocational Education and Training (TVET) colleges.
Manamela said the SIU investigation under Proclamation R.88 of 2022 had identified key weaknesses in NSFAS governance, particularly the Solution Provider intermediary model and weak Memoranda of Agreement systems, which enabled financial mismanagement.
He said government had since implemented a series of reforms aimed at closing those loopholes.
“Direct payment model: From 2026, NSFAS disburses allowances and accommodation payments directly to students and accredited providers, eliminating the intermediary layer through which overcharging and ghost bed exploitation occurred,” Manamela said.
He added that revised Memoranda of Agreement (MOA) now place stricter accountability obligations on institutions, including tighter verification of student registration data and improved financial reconciliation requirements.
Manamela further said governance at NSFAS had been overhauled following the SIU and Werksmans findings, noting that the previous Board was dissolved and the former CEO’s contract terminated.
“A new Board was appointed in March 2025 with a specific mandate to implement a turnaround strategy covering financial integrity and internal controls.
''The SIU investigation continues and consequence management against implicated individuals and entities is ongoing,” he said.
Manamela also acknowledged growing pressure on student placement, noting that demand for university spaces continues to outstrip supply, particularly in urban institutions.
He said government was expanding the post-school system through the establishment of new universities in Ekurhuleni and Hammanskraal, which are at advanced stages of development.
He also pointed to plans for a Central Application Service, expected to be introduced to Parliament in 2026, which he said would improve coordination of student placement across institutions.
Manamela said TVET colleges remain a key alternative pathway for students unable to secure university admission, adding that NSFAS funding remains available for qualifying students in those institutions.
Manamela also said there are currently no plans to integrate private institutions into NSFAS funding or into public university structures.
He said NSFAS funding is restricted to public higher education institutions as defined under the Higher Education Act of 1997.
“There is no provision for extending NSFAS funding to private institutions, nor for the integration of private institutions into public university structures for funding purposes,” he said.
He added that any such move would require legislative amendments and a full assessment of financial and quality assurance implications, and confirmed that no policy change in this regard is currently being considered.
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