The Special Investigating Unit has recovered more than R1.7 billion in misallocated National Student Financial Aid Scheme funding.

Higher Education and Training Minister Buti Manamela said the investigation, launched under Proclamation R.88 of 2022, exposed serious weaknesses in how NSFAS money was managed.

According to Manamela, the SIU identified two key problems behind the misallocation. These were the use of a Solution Provider intermediary model and weak governance around memoranda of agreement with institutions.

The model placed an extra layer between NSFAS and the students it was meant to support. Weak agreements with institutions also created space for overcharging and abuse.

One major concern was the use of so-called “ghost beds”. These were accommodation spaces that were billed for but not actually occupied.

Direct Payments From 2026

Government says it is now changing how NSFAS operates.

From 2026, NSFAS will pay allowances and accommodation funding directly to students and accredited providers. This move is aimed at cutting out intermediaries and tightening control over public money.

Manamela said agreements with institutions have also been revised. The new terms include stronger reconciliation duties, tighter checks on registration data and clear financial accountability requirements.

At governance level, NSFAS has also seen major changes. The former board was dissolved and the former chief executive’s contract was terminated after findings in the Werksmans Report.

A new board was appointed in March 2025. Manamela said its mandate is to drive a turnaround strategy focused on financial integrity and internal controls.

The SIU investigation is still ongoing. Consequence management against implicated individuals and entities is also continuing.

Students Still Locked Out

The funding overhaul comes as thousands of qualifying students remain unable to secure places at universities and TVET colleges.

Manamela acknowledged the pressure, saying the department does not minimise the placement challenge.

He said demand for university places continues to exceed available capacity, especially at established urban institutions.

Government’s response includes planned legislation for a national Central Application Service. The legislation is expected to be tabled before Parliament in 2026.

The system is meant to improve placement coordination and help students find available spaces across the higher education sector.

Students who do not secure university placement are also being directed to TVET colleges, where funded vocational and occupational programmes are available.

No NSFAS Funding for Private Colleges

Government has ruled out extending NSFAS funding to private higher education institutions for now.

Manamela said the current law limits NSFAS funding to students at public institutions.

Any expansion would require changes to the NSFAS Act, along with checks on financial sustainability and quality assurance.