Budget boost brings some relief to student aid scheme, but varsities’ problems pile up

The announcement by Finance Minister Enoch Godongwana of a cash injection into the National Student Financial Aid Scheme (NSFAS) offers a touch of relief to the scheme’s funding shortfalls.

But in spite of the promises of a sustainable student funding model to address the funding of students in the “missing middle” category, the problems plaguing the sector continue to pile up.

The minister’s budget speech came roughly a week after students at several higher education institutions began the 2022 academic year by protesting against financial exclusion, owing to financial aid woes and student debt.

Although the demands of protesters were met by temporary concessions made by individual universities, the system remains largely unchanged.

On 23 February, Godongwana announced the additional allocation of R32.6-billion “for financial support to current bursary holders and first-year students under the National Student Financial Aid Scheme”.

The Budget Review document said: “A ministerial task team is developing a new student funding model for higher education and training to be introduced in 2023.

“In the meantime, an additional R32.6-billion is allocated to the NSFAS over the medium term to continue the current bursaries for students from families with annual incomes below R350,000, and to fund the new cohort of entrants to institutions of higher learning.”

Any shortfalls in the funding of students would be covered by the Department of Higher Education and Training, Godongwana said. This would be achieved through the “reprioritisation” of its budget.

Professor Ahmed Bawa, chief executive of Universities South Africa (USAf), said the additional money signalled some commitment by Treasury to address the NSFAS funding shortfall in the medium term.

“The additional R32.6-billion will cover a significant part of the shortfall, and the rest of the shortfall will be made up from the department’s budget,” he explained.

Earlier in 2022, NSFAS had to press pause on its funding decisions because it had a funding shortfall of R9.6-billion. This meant universities had to stop or extend their registration periods.

Asive Dlanjwa, national spokesperson for the South African Union of Students (SAUS), told DM168 that the union had projected a R10-billion shortfall in 2021 and had informed the Department of Higher Education in October of that year.

“The Minister of Higher Education and Training, Blade Nzimande, did nothing,” he said. “And so, when registration and the 2022 academic year started – when NSFAS had to advance funding for applicants – [it] couldn’t, and had to shut [its] systems down.”

This funding delay sparked unrest at some universities, Dlanjwa added.

Classes were brought to a halt on 14 February, the first day of the academic year at Nelson Mandela University in Gqeberha, by students protesting over registration difficulties and NSFAS’s failure to clear students to receive their funding.

Zandile Mbabela, the university’s media manager, confirmed to DM168 that some of the registration problems that students had did “lie with NSFAS, and the university is in daily communication with the scheme towards addressing any outstanding matters”.

“The late registration period is open until Friday, 4 March. The university, however, is mindful that for some students, registration also hinges on their ability to secure funding through NSFAS and external bursaries, among others,” she added.

Dlanjwa said that although SAUS welcomed the additional allocation of funds to NSFAS, there were still concerns about any shortfalls that would have to be covered by the Department of Higher Education and Training from its own budget.

Bawa said USAf was concerned about how the department would “reallocate resources”, and “hopes very much that there won’t be implications on the subsidy system, because that would be disastrous to the universities”.

He believes there is a need to “build a more sustainable financial aid system”, one that did not find itself overcome by shortcomings at the start of the academic year.  

“Insufficient financial student aid is always a major issue at the beginning of every academic year, and something that is very much a feature of the breakdown at the beginning of every year,” he said.

The Department of Higher Education and Training has been dealing with NSFAS’s shortfalls by reallocating money in its university budget that was originally designated by National Treasury for subsidies and infrastructure, Bawa explained. “Of course, that has serious long-term consequences for the sustainability of the system.”

Moving target

In spite of increased government funding for higher education, it is clear that the number of students seeking financial aid is increasing year on year – and so is student debt.

Nzimande announced at the beginning of February that the audited accumulated gross student debt at South African universities, as of 31 December 2020, was R16.5-billion.

That amount included students who had exited universities with debt, he said.

Professor Ahmed Bawa, chief executive of Universities South Africa. (Photo: Supplied)