South Africa’s National Student Financial Aid Scheme (NSFAS) is facing one of its most difficult moments as it grapples with a massive R10.6 billion funding shortfall for the 2025 academic year while also confronting a staggering R45 billion in unpaid student loans dating back to its predecessor, TEFSA.
NSFAS board chairperson Dr Karen Stander explained that the scheme’s university allocation for 2025 has already been oversubscribed, leaving thousands of students without access to funding. She noted that this gap has prevented certain categories of students from registering, including those whose applications were submitted late by institutions, some whose appeals were approved but could not be accommodated, second-semester applicants, and students who applied in the wrong funding window. Because the NSFAS Act prohibits the scheme from spending beyond its budget, the leadership has turned to Treasury and the Department of Higher Education for permission to use alternative funds to close the gap.
The crisis has been exacerbated by a rise in the number of qualifying students, the effects of South Africa’s cost-of-living crisis, expanded eligibility thresholds, and the limited growth of government resources in real terms. According to figures shared by the board, universities have already used about three quarters of their NSFAS allocation, while TVET colleges have spent just over 70%. In total, approximately 783,000 students, around 577,000 at universities and 206,000 at TVET colleges, have received support so far this year, but many others remain in limbo.
Adding to the strain, NSFAS has revealed that about R45 billion in old student loan debt remains unpaid, much of it from loans issued before the 2018 shift to a grant-based system. Acting CEO Waseem Carrim emphasized that many former students who received financial aid are now employed and should be repaying what they owe.
He argued that recovering these funds is not just a contractual obligation but also a way of ensuring that new generations of financially needy students can be supported. To strengthen collections, NSFAS has appointed external debt collectors, including law firms and revenue-recovery agencies, to actively pursue repayments from former beneficiaries.
At the same time, the board has acknowledged that NSFAS’s problems extend beyond funding and debt. To restore credibility and effectiveness, six major reform projects are being rolled out. These include a redesign of the organisation’s structure, a new loan management strategy, a long-term sustainable funding framework, a transitional approach to student accommodation, a digital transformation plan to address ICT weaknesses, and a revised business operating model.
Leadership has conceded that poor governance, weak technology systems, and gaps in accommodation processes have left students frustrated, with many complaining about late allowances, registration delays, and a lack of transparency.
For students on the ground, the impact of these issues has been immediate and personal. Some have been left unable to register, others are still waiting for appeals to be processed, and many continue to struggle with late payments that make it difficult to cover rent and food. While NSFAS insists that it is working to address these issues, trust in the institution remains fragile. The board has described education as a “public good” that must be protected, but also admits that sustainability cannot be ignored if the scheme is to survive.
The next few months will be critical. NSFAS is waiting on decisions from Treasury and the higher education department regarding access to alternative funding, while the debt recovery drive is expected to intensify. At the same time, the success or failure of the six priority reforms will determine whether NSFAS can finally move from firefighting year after year to becoming a stable, transparent, and sustainable system that delivers on its promise to South Africa’s students.
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