The Minister of Higher Education and Training, Pius Manamela, expressed serious concern regarding the financial sustainability of the National Student Financial Aid Scheme (NSFAS), warning that the funding deficit could reach R33 billion by 2029 if the government does not revise higher education funding principles.
Manamela stated that the government is negotiating with the National Treasury concerning the current NSFAS deficit of approximately R15 billion. He noted that this financial gap has significantly increased since the introduction of the current student funding policy. The Minister presented the deficit dynamics: last year it was R13 billion, the year before that was R7 billion, even earlier R5 billion, and in the first year of the policy's implementation, it was R2.5 billion.
These statements were made during a meeting with the higher education and training delegation within the National Media Group on Wednesday, where he highlighted the main challenges facing the post-school education sector.
Unstable Policy
Manamela emphasized that the widening financial gap cannot be attributed solely to leadership issues or administrative disputes within NSFAS; the root of the problem lies in the funding policy structure itself. He stated that the situation is caused by a 'policy that is unstable.'
In this regard, he proposed two possible solutions: either allocating the entire necessary amount—R33 billion in the medium term, or revising the methods of distributing these funds among citizens. NSFAS remains a central element of the country's higher education financing system, with approximately R56 billion from his department's budget directed towards this scheme.
The Minister warned that the instability of NSFAS carries far-reaching consequences beyond individual student allowances. He explained that the collapse of NSFAS could lead to universities not receiving payment for tuition, problems with private housing payments, which threatens the student experience itself, and could negatively affect those providing student accommodation.
Despite NSFAS successfully funding hundreds of thousands of students, Manamela considers it unacceptable if even one student does not receive their entitled grant. He specified that the concern is not the fact of paying grants to 800,000 students annually, but the probability that one of these students will be without payment on any given day, which is too great a risk.
Consideration of Income-Contingent Loans
Amid growing pressure on funding, Manamela reported that one of the options being considered to create a more sustainable higher education funding model is an income-contingent loan system. Under this system, students could access education without upfront payment and begin repaying the funds to the state only after their post-graduation income reaches a predetermined threshold.
The Minister noted that in the long term, the possibility of implementing such a credit mechanism is being discussed to make education free for everyone at the point of entry. An income threshold is set after graduation, and the repayment amount to the state is determined based on it. He mentioned Australia as an example of a country that has implemented such a model, but stressed that any South African version must be adapted to local conditions.
NSFAS Stability and Readiness for 2027
Manamela stated that stabilizing NSFAS remains one of his main priorities, asserting that stability depends not only on having a board of directors or an administrator. He clarified that stabilization also implies having competent people in the roles of CEO and senior managers, which is a current concern.
The immediate focus is on ensuring NSFAS is ready for the 2027 academic year. Priorities include ensuring the proper functioning of the board of directors together with NSFAS senior management, preparing for the 2027 academic year, opening applications, finalizing funding guidelines, and resolving student accommodation issues.