Price gouging the reason for NSFAS student housing allowance caps — Nzimande

Amid the uproar over the National Student Financial Aid Scheme’s (NSFAS’s) decision to cap accommodation allowances for students, Higher Education Minister Dr Blade Nzimande pointed to alleged price gouging from accommodation providers as reasoning for the allowance caps.

He spoke about the matter on Thursday while addressing the National Assembly on the post-school education and training sector’s state of readiness for the academic year.

Nzimande was speaking while protests and demonstrations at universities, triggered by the NSFAS accommodation allowance caps, as well as increasing financial burdens that students face, are ongoing.

The minister came to the defence of NSFAS in his address and claimed that unregulated costs of student accommodation were the reason accommodation allowance caps had been introduced.

Higher education minister Blade Nzimande. (Photo: Leila Dougan)

‘Profiteering and price collusion’

He said: “In order to manage the unregulated, increasing cost of student accommodation, NSFAS has introduced a R45,000 per annum cap on student accommodation.

“NSFAS introduced this cap to manage profiteering and price collusion by private providers of accommodation. Currently, there is a challenge that we are aware of, of private and institutional accommodation that is above the R45,000 cap. NSFAS is working with the affected institutions and is fast-tracking the accreditation of the affected areas.”

NSFAS was considering reporting student accommodation providers to the Competition Commission for “possible price collusion and price gouging”, IOL reported.

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Nzimande noted that it was “unfair” for some students to be paying R16,000 per annum for accommodation while others pay up to R78,000 per annum. The intent behind capping accommodation allowances at R45,000 per annum was to prevent such discrepancies, according to the minister.

Asked to comment, the Competition Commission responded on Friday morning that no official complaint had been lodged.

The University of Cape Town’s student representative council initiated a campus shutdown on Monday, 13 February because of housing issues related to the NSFAS accommodation allowance caps, on top of other grievances such as fee blocks and financial exclusion.

Read more in Daily Maverick: “Shutdown rocks UCT on first day of study as students fume over fee blocks, housing”

The cries against NSFAS can be heard from institutions throughout the country including the University of Pretoria, where students slept outside their campus as part of a demonstration. Many students at The University of KwaZulu-Natal slept in corridors and hallways because of a lack of housing.

?Happening now?

Students at the university of Pretoria sleeping outside as they have no accommodation due to the R45 000 NSFAS cap.#UP_SRC2023#AccommodationCrisis#UPWay pic.twitter.com/8NSotMT9am

— UP SRC (@UP_SRC) February 16, 2023

University of KwaZulu-Natal student leaders have threatened to shut down the institution until all students are allocated residences as many spend nights in halls, corridors and classrooms. https://t.co/bTji6c2wNB

— Sunday Times (@SundayTimesZA) February 23, 2023

In his address, while the minister stood by NSFAS’s decision, he acknowledged the unrest on campuses.

Rolling blackouts

Nzimande also spoke about how rolling blackouts were affecting institutions of higher learning. He said that the sector of post-school education and training had formed a joint working group that was conducting surveys about the impact of the blackouts.

He noted that many universities had developed plans or were actively working to develop plans to deal with rolling blackouts.

Nzimande said dealing with gender-based violence on campuses was a top priority. He said the Department of Higher Education was “among the leading departments that has introduced a policy framework on fighting gender-based violence”.

The minister said he would convene a national summit and dialogue to address issues of “gender inequality, women’s emancipation, toxic masculinity [and] patriarchy”.

Competition Commission spokesperson Siyabulela Makunga told Daily Maverick in a response on Friday that no record had been received of a complaint by NSFAS about price gouging, but that the commission had a legislative obligation to investigate if a complaint is lodged.  Makunga said that the law "prohibits any agreement concluded between two or more parties ordinarily considered to be competitors that would be to the detriment of competition within a specific market or trade. Furthermore, the Act empowers the Commission to investigate and/or refer any such matters to the Competition Tribunal for prosecution. If found guilty, respondents may be liable to pay an administrative penalty of up to 10% of their total revenue for the period of contravention." DM

This article was updated on Friday to include a response from the Competition Commission.