Three National Student Financial Aid Scheme (NSFAS) employees were arrested in Cape Town on Tuesday for allegedly diverting students' money into their personal accounts, NSFAS said on Wednesday.
"The employees were all arrested on allegations of fraud relating to diverting student allowances to their personal accounts," said a statement issued on behalf of Dr Randall Carolissen, NSFAS executive administrator.
They were arrested in the NSFAS's Wynberg office.
NSFAS's purpose is to subsidise the education of poor and working-class South Africans who cannot afford the fees of one of the 26 public universities or 50 technical and vocational education and training colleges.
The government has set aside R80bn for NSFAS for the next three years.
This is to fund applicants who can prove they come from a family with a combined household income of not more than R350 000 a year, or not more than R600 000 a year if the applicant has a disability.
NSFAS was put under administration in August 2018, and Higher Education Minister Blade Nzimande has extended this to August 2020.
In line with the terms of reference, the administrator launched forensic investigations into the general disbursement of student funds; student allowances; leakage of sensitive and confidential information; and human resources-related issues.
"NSFAS would like to reassure the public that the arrest of the three employees will not have an impact on the 2020 applications cycle, which is expected to close on November 30, 2019," Carolissen said.
NSFAS has also reminded applicants seeking financial aid for 2020 that the application process is free.
This after it learnt that people were pretending to be NSFAS officials who were asking for money to process applications.
It appealed to anybody who suspected suspicious activity to report it on the NSFAS fraud hotline "Vuvuzela" on toll-free number 0860 247 653 or to SMS "Call-back" to 30916, or email firstname.lastname@example.org.
In July, NSFAS said it was looking into complaints by some students in Port Elizabeth that they had been defrauded of their allowances.
This had apparently also been handed over for investigation.
NSFAS has been asked how much was allegedly diverted, and the story will be updated when the reply arrives.