Sizwe Nxasana's early departure from the National Student Financial Aid Scheme (NSFAS) has confirmed that the organisation is on the verge of collapse.
NSFAS is the only channel that distributes funding to students at universities and technical vocational education & training colleges. The collapse of the scheme will affect the student intake and leave thousands uncertain of whether they will receive funding.
Without a clear plan, it is uncertain what the process for distributing funds to students will be, and higher education institutions will be crippled if fees are not paid.
Nxasana resigned from NSFAS last week as the scheme battled to clear the backlog of student applications for funding dating back to 2016. In July higher education & training minister Naledi Pandor halted applications to the scheme, but she said this week funding would resume again in September.
There have been isolated strikes at educational institutions since the beginning of the year, with claims by students of allowances not being disbursed or of uncertainty about funding.
The scheme came under additional strain this year after then-president Jacob Zuma surprised the National Treasury in December by announcing fee-free higher education.
The announcement meant that the multibillion-rand scheme had just two weeks before the start of the 2018 academic year to change its processes and systems to execute its new mandate while still running the old funding scheme.
It is clear that NSFAS was not ready to deal with the volume of applications and processing of payments.
NSFAS was inundated with 600,000 applications for funding, compared with 250,000 last year.
600,000
The number applications NSFAS received this year after former president Jacob Zuma announced free higher education, up from 250,000 last year
Speaking at the Gordon Institute of Business Science earlier this week, Nxasana said Zuma's announcement had exacerbated the problems NSFAS was facing.
Professor Jonathan Jansen, a former vice-chancellor of the University of the Free State, said: "The whole system has collapsed, simply because there wasn't enough time to include fee-free higher education for students."
Nxasana's departure has signalled just how fractured the scheme is.
DA spokesperson on higher education Belinda Bozzoli said the blame for Nxasana's departure and the collapse of NSFAS could be put squarely on Zuma's shoulders.
The department of higher education & training confirmed last week that the entire NSFAS board would soon be dissolved.
The NSFAS payment system had been under extreme strain since December 2016, said Nxasana. He was appointed chair of the NSFAS board in 2015 by then minister Blade Nzimande, to turn the organisation around.
At the same time, the financial aid function was centralised at the NSFAS and described as a student-centred model, which compounded problems. Previously, universities would receive any funding allocated and decide to whom it should be awarded, based on a means test to determine the income thresholds of students.
Jonathan Jansen
— nsfas can destroy they reputation of any good man or woman
"NSFAS can destroy the reputation of any good man or woman. You're doing the impossible," said Jansen, referring to the difficulties in managing the scheme.
The NSFAS funds are in disarray and have been the subject of an internal investigation implemented by Pandor.
"The minister needs to come clean about NSFAS and give us a timeline for rebuilding the organisation," said Jansen.
In the budget in February, the largest re-allocation of resources was to higher education and training. It will get R57bn extra over the medium term to fund free education. It is the fastest-growing spending category, with average growth of 13.7% a year.
This year, spending on free higher education will amount to R12bn, increasing to R25bn next year and R30bn the year after. The money will go on fees, transport and some food.
With the fiscus already under strain, the reallocation was not an easy task. The Treasury announced the controversial VAT increase, from 14% to 15%, to help fund it, coupled with a reallocation of resources.
But so far, the implementation of fee-free higher education has been problematic.
"It's not that the money hasn't been set aside," said BNP Paribas economist Jeff Schultz. "It shows the breakdown of institutional capacity under the previous administration."
However, the failures of NSFAS stretch back more than a decade.
"These challenges are not new," said Professor Ahmed Bawa, CEO of Universities SA. "Protests at historically black universities and technikons have gone back more than 10 years, driven primarily by financial aid issues. The financial aid programme has always been problematic. NSFAS wasn't designed as a financial aid ecosystem."
Ian Stuart, the acting deputy director-general in the Treasury's budget office, explained that in recent years, NSFAS had "massified" the number of people going to university, with poor students getting less than their fair share.
What is required from the minister is decisive action aimed at righting the ship before it goes down, taking with it the tertiary education sector.
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