The Special Investigating Unit (SIU) has reportedly uncovered a "mafia" operating student accommodation scams.
These organised groups can be found in the student accommodation sector where they "connive" with service providers, says Chairperson of the National Student Financial Aid Scheme (NSFAS), Ernest Khosa.
According to NSFAS, this "mafia" poses a great threat and could potentially "destabilize the entire higher education sector."
Khosa and NSFAS briefed Parliament's finance watchdog, the Standing Committee on Public Accounts (Scopa), on Tuesday, 18 April 2023, about the SIU's investigations into student funding and fraud at the entity.
The student financial aid scheme said it was not just facing a financial threat, but also a security threat from a “mafia” threatening the entire sector.
The SIU has been able to identify some problems that are threatening the security of the sector as a whole, which are the mafias in our student accommodation areas, conniving and fraud among accommodation providers.
According to Khosa, NSFAS CEO, Andile Nongogo has also been receiving threatening messages.
"We saw threatening SMSes directed at the CEO of NSFAS by people who are worried about our new accommodation policies," he said.
This is not the first incident regarding fraudulent student accommodation surrounding NSFAS.
Allegations of collusion at private student accommodation recently arose, with many students claiming that private student accommodation providers have increased rent prices for their own personal gain, which is now costing over R4000 per month.
The stipulated rent threshold, as outlined by NSFAS, is R4 500; but, reportedly, student accommodation providers are pricing rent figures way beyond the threshold, meaning student housing has become unaffordable for many.
As a result, many students have been “left without accommodation...because they could not afford the new rent amounts”, even though its expected that they'll be able to afford housing with the allowance they receive from NSFAS.
In an attempt to regulate the prices for NSFAS accredited accommodation sites, the bursary scheme introduced a cost cap of R45,000 per annum, challenging those providers who have forced prices above and beyond this amount.
However, not everyone is happy about the implementation of the accommodation cap.
This cap is applied to all NSFAS-funded students, regardless of whether they were in university accommodation or private accredited accommodation. However, a shortage of student housing provided by public universities has left students with no option but to seek out housing from private service providers.
The problem that then arose was the overcharging of private student accommodation facilities, particularly because accommodation providers know the government will be covering the costs.
But, due to the allowance cap, there isn't enough money provided by NSFAS to afford the "astronomical" rent prices, leaving thousands of students stranded and homeless.
NSFAS is currently under investigation by the SIU, on allegations of maladministration and corruption, which recently resulted in the discovery of "inappropriate" allocations of NSFAS funds to students that aren't meant to qualify for financial aid.
The SIU uncovered around R5 billion in mismanaged funds that were allocated to 40 000 students.
Khosa has commended the SIU for shedding light on the challenges in the sector as it continues its investigations into various fraudulent activities.
