Public Protector to launch probe into student housing SIU findings

The Public Protector will launch a proactive investigation into student housing, following an inquiry into administrative deficiencies at the National Student Financial Aid Scheme (NSFAS).

EWN reports that Advocate Kholeka Gcaleka found that NSFAS had improperly funded more than 40,000 students at an estimated cost of R5.1 billion. She said findings by the Special Investigating Unit (SIU) had uncovered maladministration and financial irregularities at 76 tertiary institutions. Gcaleka added that the investigation had also identified systemic issues around student accommodation, including risks of fraud and exploitation.

Background to the SIU findings

The R5.1 billion figure originates from an SIU investigation first presented to Parliament's Standing Committee on Public Accounts in April 2023. The SIU found that the affected students had household incomes above R350,000 and would therefore not have qualified for NSFAS funding under the scheme's rules. In many cases, parental details were not submitted at application stage, meaning the required means test was never properly completed.

The SIU has since facilitated a refund or ring-fenced roughly R38.3 million owed to NSFAS from three TVET colleges – two in the Western Cape and one in Mpumalanga – and is engaging other institutions to establish whether further overpayments need to be ring-fenced ahead of the investigation's conclusion.

The unit's findings pointed to a fundamental control failure at NSFAS: the scheme had no annual reconciliation process between funds disbursed to institutions and the actual list of registered, funded students.

This gap led to both overpayments and underpayments across institutions from 2017 onward. NSFAS has since appointed a service provider to conduct this reconciliation retrospectively, through a process termed "close-out reporting."

The SIU also identified a range of related issues, including double-dipping, unfunded students who nonetheless received money, dropouts who remained on the funding list, and syndicates operating within student accommodation.

It attributed these failures to governance and senior management across NSFAS and the affected institutions not fully discharging their legislative duties.

The SIU's investigation is authorised under Proclamation R88 of 2022, empowering it to probe corruption and maladministration at NSFAS and to recover financial losses suffered by the state.

Under the Special Investigating Units and Special Tribunals Act, the unit may pursue civil action in the High Court or a Special Tribunal, and will refer any evidence of criminal conduct to the National Prosecuting Authority.

Additional information: Special Investigation Unit