Rethinking NSFAS: Why abolishing it isn't the solution

Recent remarks by Finance Minister Enoch Godongwana have triggered renewed debate about the state of the National Student Financial Aid Scheme (NSFAS).

In a pointed statement, the Minister suggested that, given NSFAS’s persistent failures, one might be tempted to shut it down entirely. His frustration reflects a sentiment widely felt across higher education institutions: NSFAS, in its current form, is struggling to fulfil its mandate.

But while the Minister’s criticism is understandable, the question we must ask is deeper and more structural. South Africa must interrogate not only the performance of NSFAS but the role that public agencies play in delivering essential social programmes.

NSFAS was formally established in 1999 as a statutory body to widen access to higher education for poor and working class students. It replaced the Tertiary Education Fund of South Africa (TEFSA) and was tasked with administering state funded financial aid directly to qualifying students.

Its founding goals were clear:

• to redress historical inequalities in higher education,
• to remove financial barriers to study,
• to manage and disburse student funding transparently,
• and to support national development through increased graduate production.

For years, NSFAS handled these functions internally, providing a direct link between government funding and student support.

 Operational drift and the outsourcing crisis

Over the past few years, NSFAS gradually outsourced core functions such as allowance disbursement, verification systems, and digital infrastructure. These contracts were meant to modernise the scheme, but instead:

• administrative costs increased,
• system failures escalated,
• allowances were delayed,
• communication broke down,
• and accountability became fragmented.

The consequences have been severe: hunger on campuses, delayed registrations, disrupted academic progress, and widespread uncertainty for the very students NSFAS is meant to protect.

This is the context in which the Minister’s frustrations must be understood.

The Solution is not abolition

There is validity in the Minister’s argument that NSFAS has strayed too far from its initial purpose. A scheme designed to administer funding directly cannot justify outsourcing its core responsibilities to external providers at the expense of efficiency and accountability.

If NSFAS cannot execute its mandate internally, then its operational model must be reviewed. But the answer cannot simply be shutting it down. Doing so would not resolve the systemic failures; it would deepen them.

South Africa must resist the temptation of simplistic solutions to structural governance problems.

Why Public agencies cannot simply be closed

A wider governance perspective shows that agencies such as NSFAS are not optional administrative conveniences; they are essential coordination bodies designed to deliver complex social functions. South Africa has multiple examples:

• SASSA ensures that social grants reach millions of vulnerable households with dedicated systems built for verification, fraud prevention, and mass distribution.
• NYDA coordinates youth development programmes, entrepreneurship support and policy implementation targeted specifically at the youth demographic.
• NSFAS administers higher education financial aid, manages eligibility systems, and supports students throughout their academic journey.

These agencies were created because the functions they perform cannot simply be absorbed by a single government department. For example, one would not dissolve SASSA and expect the National Treasury to directly deposit grants into every household’s bank account. The administrative, technological and social work involved is too specialised.

Similarly, NSFAS exists because student funding requires dedicated oversight, engagement with institutions, continuous verification, and real-time responsiveness to student needs. Its failures do not invalidate its purpose. Instead, they highlight the urgent need to rebuild internal capacity, strengthen governance structures, and professionalise operations.

In public administration, the collapse of performance does not necessarily indicate that an institution is unnecessary. More often, it signals the need for intentional reform rather than abolition.

Rebuild, reform and recentre students

South Africa now faces a critical choice. We can either allow NSFAS to continue drifting or confront its weaknesses decisively and constructively. The latter approach requires:

• ending the harmful outsourcing model,
• rebuilding internal technical capacity,
• tightening governance and oversight,
• restoring transparent communication,
• strengthening financial controls, and
• ensuring that the scheme remains centred on student success.

Higher education is one of the most powerful tools available for national development. Weakening NSFAS would undermine South Africa’s longterm economic and social prospects.

Reform is the only sustainable path

The Minister’s frustrations are justified, and the public’s concerns are valid. NSFAS has failed too many students for too long. But closing the scheme would create deeper structural problems in a system already under strain.

We must recognize that institutions like NSFAS, SASSA, and NYDA exist because they perform core developmental functions that no other body can execute with the same focus. The solution is not to eliminate these agencies but to reform and rebuild them, so they fulfil the purpose for which they were created.

NSFAS stands at a crossroads. South Africa must choose the path of institutional renewal not abandonment to ensure that every deserving student can access and succeed in higher education.

* Khorommbi is a former UCT SRC president