Wrong payments to students rocket by 300% to R1 billion in a year - NSFAS

Incorrect payments to students at SA universities and colleges by the national financial aid scheme increased over 300% between 2017/18 and 2018/19, resulting in over R1 billion in irregular expenditure - and a qualified audit.

The National Student Financial Aid Scheme tabled its annual report in Parliament this week. The scheme provides financial assistance to eligible students at public universities and Technical and Vocational Education and Training, or TVET, colleges. In 2018 over 600 000 students qualified for financial assistance. 

The report states that in the 2017/2018 financial year the scheme incurred R210m in irregular expenditure for paying out incorrect amounts to students or institutions for loans or bursaries. This increased by 370% in the 2018/2019 financial year to more than R1 billion. 

Dr Randall Carolissen, appointed as NSFAS administrator in August 2018 for a single term that has since been extended, wrote in the report that the irregular expenditure stemmed from poor internal controls and lax oversight, which resulted in 

  • Payments to students who had been funded for courses specifically excluded from NSFAS funding;
  • Payments in excess of the loan or bursary award that a student had received;
  • Payments to students where the bursary or loan agreement was not yet signed;
  • Payments to the wrong students; and
  • Multiple incorrect payments to the same students

Carolissen said that when he arrived at the financial aid provider in August last year he found an institution in a "chronic state of maladministration".

"At the time of the appointment of the administrator, nobody had anticipated the degree of dysfunctionality of NSFAS or the pervasiveness of maladministration and the great rot that ensconced itself in the system."

There were few efforts to check or reconcile that student accounts matched those of institutions and "ad hoc reconciliations were only carried out only upon account queries".

In addition to irregular payments, NSFAS also struggled to pay students what they were owed on time. "In 2018 majority of students went unfunded for periods of up to eight months, causing considerable hardship and disruption in the higher education sector," he said. 

Some disbursements were being made from unencrypted computers off-site and after hours, said Carolissen, which has been stopped.

The group's system to provide some students with book vouchers to buy textbooks at selected retailers has also been ended. The report stated that an internal audit had uncovered prima facie evidence of abuse of the the system.  In a response to a parliamentary question in September, Minister of Higher Education Blade Nzimande wrote that the system had become a "target of voucher scams on various campuses" and some students were trading vouchers for cash. A forensic investigation is currently underway. 

Carolissen, whose term as administrator has been extended until August 2020, wrote that oversight and controls have been improved, resulting in a smoother for the record number of students applying for financial aid for the 2019 year. One of the group's aims is to start issuing student account statements on a monthly basis. 

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