In 2023, the National Student Financial Aid Scheme (NSFAS) introduced a new direct payment system for student allowances. The implementation of the system has been in the spotlight since its introduction.
The National Student Financial Aid Scheme (NSFAS) introduced a new direct allowance payment system to provide students with greater control over their money and confidence in their allowances’ payment. Recently, the Minister of Higher Education was asked to provide an update on the system’s implementation.
Minister Nzimande was questioned about when institutions were informed that the system’s implementation would commence, how many students have been onboarded onto the system, and the challenges encountered by students.
Nzimande explained that the 2023 NSFAS Eligibility Criteria and Conditions For Financial Aid were released in December 2022. Rule 7.3.2 of these criteria emphasised that NSFAS would allow for a minimum of 3 months’ notice to institutions before taking over full responsibility for allowances.
University NSFAS Bank Account Onboarding
Subsequently, on 3 March 2023, NSFAS issued a notice to universities, informing them that starting from 1 June 2023, the scheme would begin disbursing allowances directly to beneficiaries.
Another notice on 26 May 2023 clarified that the first direct payment would take place on the last day of June 2023, with institutions instructed to continue processing June allowances for students.
While the last NSFAS allowance payments by institutions were made in June 2023, students were encouraged to onboard themselves onto the NSFAS bank account system. NSFAS partnered with four fintech service providers to bring the new payment solution to students.
Students were required to register with the fintech partner assigned to their institution. Failure to register for the NSFAS bank account with the fintech partner would result in students not receiving their allowances.
Nzimande explained that by the end of June 2023, 24 universities had successfully onboarded to the direct payment system, ensuring their students received allowances for July 2023 through direct payments.
Two universities, Stellenbosch University and Northwest University, have yet to disburse the allowances for the month of July 2023. These two universities joined the direct payment program toward the end of July 2023 and released August 2023 allowances.
It was revealed that 316,741 students had onboarded themselves onto the system.
The minister acknowledged that the transition to the new direct payment system has not been without its fair share of challenges. These challenges included cyber attacks, transition resistance from institutions, incorrect allowance payments, and excessive bank charges.
Cyber-attacks have prompted partners to implement robust cybersecurity measures for enhanced security. Resistance to the new payment system has arisen from various stakeholders, necessitating ongoing engagement to address concerns and emphasise system benefits for smoother transitions.
Incorrect allowances resulted from inaccurate registration data, leading NSFAS to introduce an adjustment window for institutions to correct their data. Concerns about direct payment charges prompted negotiations, resulting in a reduction from R89 to R12, with further discussions set for the future.
NSFAS Will Terminate Contracts With Allowance Payment Service Providers
The National Student Financial Aid Scheme (NSFAS) is set to terminate contracts with service providers for the direct payment of student allowances. This comes after the board carefully reviews the findings of an investigation into potential conflicts of interest in the appointment of service providers.
Four service providers were appointed to facilitate direct payments to students as part of this bid.
Several key findings were made by Werksmans Attorneys. They found that there may have been possible relationships between key individuals including CEO Nongogo and the Fintech companies appointed to pay allowances directly to students.
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