The Student Representative Council (SRC) at Stellenbosch University has lodged a formal complaint against the National Student Financial Aid Scheme (NSFAS) with the office of the Public Protector. The written complaint is calling for an investigation into the newly introduced direct allowance payment system from NSFAS.
William Sezoe, the Vice-Chairman of the Stellenbosch University SRC, is leading the call for an investigation into the role of NSFAS CEO Andile Nongogo in the awarding tenders to service providers for the direct payment of NSFAS allowances. Sezoe alleges that some of these service providers were given tenders despite not holding the necessary licenses.
His claims are based on findings by the Organisation Undoing Tax Abuse (OUTA).
Sezoe alleges that Nongogo had a business relationship with one of the service providers selected to provide financial technology services to NSFAS for the new direct allowance payment system. This allegation is based on findings made by the Organisation Undoing Tax Abuse (OUTA).
They also want the public protector to ascertain how service providers, together with NSFAS, are allowed to charge students exorbitant amounts of money just to access their allowances.
Since the introduction of the new allowance payment system, students have complained about being charged exorbitant bank fees to access their money along with several other challenges with accessing their allowances.
NSFAS initially said students would only be required to pay a monthly administration fee of R12. However, when students began using the NSFAS bank cards, they noticed that they were being charged high bank fees for transactions and bank withdrawals.
The R12 paid by students only grants them several free bank withdrawals and Electric Fund Transfers (EFT) transactions. However, if they exhaust these free transactions, they are charged fees, including a R10 fee for a ATM withdrawal plus R2.50c per every R100 a student withdraws.
Sezoe believes the costs being incurred by students accessing their allowances are unjustifiable adding that it is unfair that NSFAS is requiring students to pay for services that they should be serving.
I do not believe the money that is being charged for students is fair and justifiable especially when you compare these costs to most other banks.
Sezoe added that they trust that the Public Protector will investigate the matter as students do not possess the resources to take the matter to the courts for justice.
NSFAS Responds To Concerns About Bank Charges
NSFAS Spokesperson Slumezi Skosana says the standard practice is to impose fees for continuing to use their NSFAS bank account. They explained that students will only be charged R12 per month to access their allowances and attain financial freedom.
We shouldn't mislead the young people of this country by thinking that they will get everything for free… where in the world would you put your money in an institution like a bank and not pay fees?
NSFAS also added that service providers did not require banking licences as Fintech service providers are considered payment aggregator companies and would require a sponsor bank that would be responsible for the banking matters.
NSFAS Direct Payment System Explained
In 2022, NSFAS announced that it would implement a direct allowance payment system for students. This meant that students would receive their allowances directly from NSFAS and not through institutions and institution-contracted service providers.
At the time, NSFAS said the direct payment solution was introduced to ensure its accountability regarding student allowances and to establish a better-coordinated system for the transfer of funds to students.
The financial aid scheme added that the direct payment of allowances will give students the confidence that payments will be made and these
This new payment solution was first implemented for students attending Technical and Vocational Education and Training (TVET) colleges. In May 2023, NSFAS began rolling out the new payment system for university students.
Students were encouraged to register for their NSFAS Bank Account with the relevant service provider. NSFAS partnered with four service providers to bring the new payment solution to students.