Authored By:Noluthando Shoba
University of Zululand
ABSTRACT
This article presents a legal analysis of alleged maladministration, financial misconduct, and fraud within the National Student Financial Aid Scheme(NSFAS) in South Africa. Under section 29(1) (b)of the Constitution, the State is duty-bound to make further education progressively available and accessible through reasonable measures1. We examine how NSFAS was established via legislation, the National Student Financial Aid Scheme, to put the Constitutional right to education into practice2. The central issue is the alarming misallocation of funds, investigations by the Special Investigating Unit (SIU) revealed that over R5 billion was possibly awarded to more than 40, 000 students who did not qualify under the scheme’s means test3.
The main argument of this article is that these corrupt practices not only breach public finance norms but also undermine the Constitutional commitment to socio-economic rights, particularly the right to further education under Section 29 of the Constitution4. Moreover, the lack of independent oversight and accountability violates the principle, established in Glenister v President 5The State must maintain a robust, corruption-resistant institution. This piece calls for
1 Constitution of the Republic of SA,s29(1)(b)
2 National Student Financial Aid Scheme Act 56 of 1999 (SA)
3Special Investigating Unit, ‘Media Statement: SIU welcomes Arrest of NSFAS CEO and Others’ (18 April 2023) (link unavailable) accessed on (24 November 2025)
4 Constitution s29 (1)
5 Glenister v President of the Republic of South Africa 2011(3) SA 347(CC)
urgent legal and institutional reforms in NSFAS: strengthening financial controls, improving governance transparency, enhancing verification mechanisms for beneficiaries, and reinforcing independent anti-corruption structures.
INTRODUCTION
The NATIONAL STUDENT FINANCIAL AID SCHEME (NSFAS) is a cornerstone of South Africa’s tertiary education funding system. Established in 1999, it was built on the earlier Tertiary Education Fund of South Africa to become a statutory body that administers student financial support6. NSFAS helps to break down the financial barriers that would keep many young South Africans out of higher education.
Yet, behind its mission of transformation lies a troubling pattern: allegations of mismanagement, weak financial controls, and corruption. Investigations by the Special Investigations Unit (SIU) have revealed systematic failures and billions of rands that may have ended up in the wrong hands7. In this article, we examine how these problems emerged, who is affected, and what reforms might save NSFAS’s credibility and its social purpose.
Corruption and mismanagement within the NSFAS have escalated into a full-blown governance crisis, raising fundamental questions about fairness, accountability, and the State’s commitment to social justice8. The theme of this article centres on how public funds meant to empower vulnerable students are being misused through systematic failures and corruption.
The issue is critically importance because NSFAS is not just another state agency, it embodies the States’s constitutional obligation to facilitate access to higher education. Mismanagement here undermines not only the taxpayers’ money but also the very social contract that seeks to transform inequalities in South Africa. In its failure to implement should sound reconciliation
processes and internal controls, NSFAS has allowed both overpayments and underpayments to institutions, a pattern confirmed in SIU findings9.
6 NSFAS, Annual Report, 2018/2019
7Special Investigating Unit, ‘Media Statement: SIU welcomes Arrest of NSFAS CEO and Others’ (18 April 2023) (link unavailable) accessed on (24 November 2025)
8 NSFAS Crisis: Corruption and Mismanagement Plague Student Aid Scheme(2024);South African Daily(link unavailable).
9 NSFAS crisis (2024)(link unavailable)
Furthermore, the fallout from such corruption is not technical but it has profound consequences; deserving students may be inadvertently excluded, while not eligible beneficiaries drain the scarce resources. This article argues that corruption within NSFAS is a big problem because it is stopping students from getting the education they deserve, which is their right according to Section 29 of the Constitution. The people in charge are not doing their job properly, and this is causing a huge issue. To fix this the government needs to make some changes to the law to make sure there is more oversight and accountability, so that the organisation can fulfil its mandate to redress inequality and support the students it was created to serve.
LEGAL AND POLICY FRAMEWORK GOVERNING NSFAS
CONSTITUTIONAL FOUNDATION: RIGHT TO EDUCATION
The Constitutional anchor for the student funding in South Africa is the Constitution of South Africa, 1996. Section 29(1)(b) guarantees that everyone has the right to further education, which the State, through reasonable measures, must make progressively available and accessible10. (“Answers to: Section 29(1)(b) of the constitution states that everyone …”) (“Answers to: Section 29(1)(b) of the constitution states that everyone …”) Due to this guarantee, the State has a positive obligation to take reasonable measures to facilitate access to tertiary and further education. The right is not absolute in the sense of unlimited resources, but the State must act within a framework of progressive realization and reasonableness11.
Given South Africa’s history of educational inequality and exclusion, Section 29, as part of the Bill of Rights, is widely understood as central to redressing past injustices and promoting social transformation through access to higher education. Thus, any mechanism that distributes public funds for higher education such as NSFAS flows directly from Constitutional commitments.
STATUTORY BASIS: THE NSFAS ACT
The legal home of NSFAS is National Student Financial Aid Scheme Act 56 off 1999 (NSFAS ACT). The Act establishes NSFAS as a juristic person under Section 3, charged with administering student financial aid12. The Act’s purpose is to explicitly provide financial aid to
10 Constitution s29
11 Constitution Chapter 2
12 NSFAS Act s3
eligible students at public higher education institutions and public colleges13. According to the Act, NSFAS is responsible for key functions including allocating funds for loans and bursaries, determining eligibility criteria in consultation with the Minister, managing and administering the Scheme, and recovering loans14. The NSFAS Act operationalises the constitutional right, translating Section 29’s promise into a concrete funding mechanism.
PUBLIC FINANCE OVERSIGHT: PFMA AND GOVERNANCE REQUIREMENTS
Because NSFAS is a public-entity, it is subject to the Public Finance Management Act, 1999 (PFMA). According to its own reports, NSFAS is listed as a Schedule 2A national public entity15. Under the PFMA, public entities have strict obligations regarding financial management, accounting, reporting, and safeguarding of state resources16. The governance framework under NSFAS requires a board, including a board executive committee intended to provide fiduciary oversight, accountability and protection of the financial interests of the State17. In addition, NSFAS may recover loans, maintain databases raise funds and is even subject to the National Credit Act, 2005 (NCA) when functioning as a credit provider18.
JURIDICAL RECOGNITION AND LIMITS: CASE LAW
A recent landmark case is National Student Financial Scheme v Moloi and Others (574/2022) decided by the Supreme Court of Appeal of South Africa (SCA) in 2024. In this case, the court considered the legality of NSFAS’s decision to exclude funding for a second LLB degree. The Court held that the determination and revision of eligibility criteria constituted lawful executive action under the NSFAS Act, and that decision was rationally connected to the purpose for which the power was given namely to assist poor and working-class students to obtain their first undergraduate qualification19.
The court emphasized that the limitation on funding though negatively impacting some students was consistent with the State’s obligations under Section 29(1)(b), because the right to further
13 NSFAS Act s4
14 NSFAS Act s4
15 NSFAS Act, read with PFMA, Schedule 3A.
16 Public Finance Management Act 1, 1999.
17 NSFAS Act s12.
18 National Credit Act 34 of 2005, ss2(1),88.
19 National Student Financial Aid Scheme v Moloi and Others (574/2022) [2022]ZASCA 66 (03 May 2024).
education is subject to resource constraints and must be balanced through reasonable measures20. The Moloi judgement illustrates critical principles which are that the State has discretion under the right to education, and this discretion must be exercised within constitutional and statutory bounds, rational and fair. This ruling underscores the delicate balance between resource allocation and ensuring access to education, a critical consideration for policymakers and institutions like NSFAS 21. Thus, even lawful exercises of discretion including eligibility and exclusions are subject to constitutional reasonableness review.
In the case of Minister of Education v Harris (2001)22, the Court held that government education decisions must remain lawful and rational. This supports the argument that NSFAS decisions must be legally justified, transparent and not arbitrary.
The decision in the Juma Musjid case23 confirmed the Constitutional importance of access to education. Though focused on basic education, it reinforces that funding decisions affecting access must be reasonable and rights affirming.
PROMOTION OF ADMINISTRATIVE JUSTICE ACT 3 OF 2000
PAJA protects students from unfair, reasonable, or procedurally improper administrative decisions. Wrongful defunding, late appeals and unclear communication may amount to administrative injustices24.
WHY CORRUPTION IN STUDENT FUNDING IS A PRESSING LEGAL ISSUE Corruption erodes the very foundation of legal order. When public officials abuse their power for private gain, it weakens the rule of law because laws cease to be applied equally and transparently25. The constitutional court has recognised that corruption is inconsistent with the rule of law and undermines the constitutional values like accountability, human dignity and the protection of rights. In South Africa, many socio-economic rights depend on state funding.
20 NSFAS v Moloi (574/2022) [2024] ZASCA 66.
21 NSFAS v Moloi (574/2022) [2024] ZASCA 66.
22 Minister of Education v Harris 2001 (4) SA 127 (CC).
23 Governing Body of the Juma Musjid Primary School v Essay N.O.2011 (8) BLCR 761 (CC). 24 Promotion of Administrative Justice Act 3 of 2000 s3-6.
25 Constitution s1.
Corruption diverts public resources away from their intended purpose, limiting the state’s ability to fulfil its constitutional obligations26.
Corruption risks destroying public trust in institutions. Legally, when governance structures are perceived as corrupt or biased, it challenges the legitimacy of the state and its institutions27. This trust erosion has political and legal consequences: it can destabilize democratic governance, encourage impunity and weaken the effectiveness of legal and administrative oversight. Legal reforms in South Africa are underway to strengthen anti-corruption measures. For example, amendments to PRECCA and new procurements laws impose stricter duties on organizations and public bodies to prevent corrupt practices28. When corruption infiltrates funding bodies like NSFAS, legal issues are not just abstract, but they directly affect the distribution of public resources meant for students. The Prevention and Combating of Corrupt Activities Act (PRECCA) is the principal statute in South Africa for corruption29. The existence of this law shows that corruption is not merely a moral or political problem, it’s a crime and individuals can be criminally liable.
EVIDENCE OF MISMANAGEMENT AND CORRUPTION AT NSFAS INVESTIGATION BY SPECIAL INVESTIGATION UNIT(SUI) AND INITIAL FINDINGS
In April 2023, the SUI reported that over R5 billion of NSFAS funds was possibly allocated to students who did not qualify for funding. The investigation found that more than 40, 000 students across 76 higher education institutions benefited irregularly, many from households with the income above the scheme’s eligibility threshold, or where the required parental information was not properly provided during application30. The root cause, according to SIU was weak internal controls at NSFAS, the absence of an annual reconciliation process between the funds disbursed to institutions and the actual list of funded, registered students. The lack of reconciliation created opportunities for overpayments, double dipping, funding of dropouts, and
26 Mubangizi, J.C.(2012).Law, Democracy and Development. Journal of law, Democracy and Development, 16(1), 1-12.
27 Mbungazi, J.C.(2012). Law, Democracy and Development, Volume 16, Issue 1, p.5.
28 SAIGA, Legislative Changes and Proactive Measures to Combat Corruption Section 34 of PRECCA and the Public Procedure Act 28 of 2024.
29 Prevention and Combating of Corrupt Activities Act 12 of 2004, GG,( SA)
30 Special Investigating Unit, NSFAS Investigation Report (April 2023) para 3-4.
misallocation31. The SIU also flagged systematic vulnerabilities including deficient verification mechanisms, flawed IT systems, and poor records keeping at some institutions which allowed fraudulent and irregular applications to proceed undetected32.
RECOVERIES, ACKNOWLEDGEMENT OF DEBT AND INSTITUTIONAL ACCOUNTABILITY.
Since the SUI’s investigations began, there have been rounds of fund recoveries from institutions and individuals. By early 2024, SIU reported recovering R737, 926, 351 including unallocated funds and signed acknowledgment of debts with some unqualified beneficiaries33. Beyond student repayments, multiple higher education institutions and TVET colleges have returned significant sums. For example, the University of Pretoria repaid R400 million in unlocated funds34.
As of 2025, the SIU reported that it had recovered approximately R2 billion in overpayments made to universities and TVET colleges on behalf of NSFAS, a sign that improprieties were widespread and not limited to a few cases35. Despite these recoveries, the SIU maintains that a significant portion of the R5 billion initially identified remains unaccounted for, raising serious doubts about whether full restitution is feasible36. These recoveries show that the misallocation was not only theoretical but real, funds meant for needy students were disbursed improperly.
CRITICAL ANALYSIS: CHALLENGES STUDENTS FACE AS A RESULT OF NSFAS CORRUPTION AND MISMANAGEMENT
Despite NSFAS being used created as an equalizer intended to democratize access to higher education for historically marginalized learners, corruption and administrative mismanagement
31 Special Investigating Unit, NSFAS Investigation Report (April 2023) para5-6.
32 Special Investigating Unit, NSFAS Investigation Report (April 2023) para 2.
33 Business Day News, SIU recovers more than R737m in NSFAS Investigation, Shonisani Tshikalange,07 February 2024.
34 Special Investigating Unit, ‘Media Statement: SIU welcomes Arrest of NSFAS CEO and Others’ (18 April 2023) (link unavailable) accessed on (24 November 2025)1.
35 Business Day News, SIU recovers more than R737m in NSFAS Investigation, Shonisani Tshikalange,07 February 2024 para 8.
36 African Insider Report, SIU has recovered more than R2bn in irregular funds NSFAS (link unavailable), accessed on 25 November 27, 2025.
have produced effects that directly undermine students’ welfare, academic progress and socioeconomic mobility37. The consequences are not merely administrative, they are deeply lived, structural and generational.
LATE OR IRREGULAR DISTURBANCES: HOUSING, ALLOWANCES, BASIC NEEDS.
The problem of delayed disbursement is well documented. As recently as 2025, the scheme admitted that allowances and accommodation payments had been delayed due to system faults and batch processing errors, leaving students financially stranded38. Because a lot of students depend completely on NSFAS allowances for rent, food, transportation and study materials, delays have resulted in real hardship; some face eviction when landlords stop honoring accommodation contracts in absence of payments39. According to student testimonies in 2025, many had to attend classes and write exams without receiving any support. Some reportedly lacked food and funds for essentials, undermining their academic performance and wellbeing40.
INSTITUTIONAL AND ACCOMMODATION CRISIS.
Because NSFAS failed to pay many accredited and private accommodation providers on time, landlords threatened evictions and, in some cases, reportedly shut doors, leaving students without accommodation mid-semester41. The delays and uncertainty around accommodation payments have triggered broader instability not just for students, but housing providers, many of whom are small or black-owned businesses, placing the viability of student housing infrastructure under threat42.
ACADEMIC DISRUPTION, STRESS, AND EXCLUSION FROM STUDIES.
Because funding which is tuition ,allowances, accommodation is delayed or sometimes reversed, many students are unable to register on time, delaying and jeopardizing their academic year43.
37 OUTA, NSFAS Investigation Report, (February 2023).
38 NSFAS, Statement on Delayed Payments (2025).
39 NSFAS, Statement on Delayed Payments (2025)para 4.
40 Rapula Moatshe, Students rally against NSFAS funding delays, highlighting financial hardships, The Star News, (published 5 months ago), para 5.
41 Rapula Moatshe, Students rally against NSFAS funding delays, highlighting financial hardships, The Star News, (published 5 months ago), para 6.
42 Town Press, NSFAS Faces Growing Debts Crisis with Student Housing Providers, (5 August 2025), para 5. 43 Rapula Moatshe, Students rally against NSFAS funding delays, highlighting financial hardships, The Star News, (published 5 months ago), para 13.
For returning students or those dependent on NSFAS across multiple years, repeated defunding and delays erode trust in the system, discourage continuation and can drive talented but vulnerable students away from tertiary education altogether44.
COMPARITIVE ANALYSIS: FOREIGN JURISDICTIONS AND RECENT REFORMS UNITED KINGDOM REFORMS
The UK has implemented stricter regulations on private providers and franchised courses abusing student loan funding, with issues like fraud and payments to non-attending students. This led to tighter provider registration, stronger data-sharing, and collaboration between loan administrators and law enforcement. The UK regulates providers and not just students, this could be a good take for NSFAS as it would reduce third-party leakages and improve oversight of accommodation and private providers45.
AUSTRALIA’S HELP SYSTEM REFORMS
Australia’s income contingent loan system, Higher Educational Loan Program(HELP) has undergone significant reforms to improve fairness and sustainability, including caps on indexation, repayments-threshold adjustments and strengthened repayments administration. Australia’s focus is on financial stability and predictable payments, backed by robust data systems. For NSFAS the lesson is the need for clear financing models just like Australia46.
RECENT DEVELOPMENTS AND REFORMS CONCERNING NSFAS NSFAS Board Approved 6-point Recovery and Reform Plan
The board recently approved six projects aimed at restoring governance. This shows the internal recognition of systematic problems and a move toward structural reform47s.
44 The Impacts of NSFAS Delays on Students’ , Human Sciences Research Council.
45 UK Government Tightens Oversight of Student Loan Providers, Financial Times, (accessed on 25 November2025). 46 Australian Universities Accord, dewr.gov.au, (04 July 2025).
47 Jabulile Mbatha, NSFAS Board Approves 6 projects to restore governance, address challenges within scheme, Eyewitness News, ( 25 August 2025).
2025 Emergency Funding Injection to Address Shortfall
In September 2025, NSFAS announced a R13.3 billion funding boost to address a previously reported shortfall. This demonstrates an attempt to avert a funding crisis that threatened students access in 202548.
Proposal From Leader of the Economic Freedom Fighters, (EFF)
Mr. Julius Malema called for direct funding to universities and colleges instead of channeling money through NSFAS; this was said in a public statement whereby the Minister of Finance, Mr. Godogwana, supported the statement.
RECOMMENDATIONS AND REFORMS THAT WILL COMBAT CORRUPTION IN NSFAS
MANDATORY REPORTING
The National Student Financial Aid Scheme Act 56 of 1999 should be amended, there are many ways that it could be amended starting with mandatory reporting. NSFAS needs to publish periodic reports, either quarterly or bi-annually based on allocations, bursaries, allowances, accommodation-provider payments and recoveries
STATUTORY RIGHT OF APPEAL
A statutory right of appeal should be introduced for students denied, defunded, or even subjects to delayed payments by NSFAS. By this accountability and fairness will be ensured.
STRENGTHENING OF REGULATORY REQUIREMENTS
Regulations under the Public Finance Management Act (PFMA) need to be strengthened, which must include internal control systems and Audit Committees. Government must enforce stricter financial controls and ensure funds reach students quickly and directly.
A STUDENT PROTECTION ACT MUST BE ENFORCED
Courts must be more determined in protecting students’ rights when the system fails,a legislation that is more of a Student Protection Act should be established as none of the laws directly
48 Central News, NSFAS Announces R13.3 billion Funding boost to address R10.6 billion shortfall for 2025-2026, (18 September 2025), (link unavailable).
protects students against operational failure, delayed funding and wrongful defunding that is caused by the corruption in the Student Funding.
CONCLUSION
Corruption within NSFAS has grown into a serious threat to equal access to higher education in South Africa. While the Scheme was created to uplift students from disadvantaged backgrounds, poor governance and fraudulent practices have prevented many learners from receiving the support they deserve. Going forward the solution lies in stronger oversight, transparent funding processes and a legal framework that clearly protects beneficiaries. Parliament must strengthen policies; the judiciary should remain firm in enforcing fairness and civil society must continue to demand accountability. With cooperative reform, NSFAS can be rebuilt into a reliable and just instrument that truly opens the doors of learning to all.
