A two-year investigation by the Organisation Undoing Tax Abuse (OUTA) has revealed a web of governance failures and systemic weaknesses within the National Student Financial Aid Scheme (NSFAS) student accommodation system, putting billions of rands in taxpayer money and the safety of thousands of students at risk. The NSFAS accommodation model has introduced multiple ‘middlemen’ into a pipeline that was previously managed more directly by universities, creating a fertile ground for exploitation and administrative chaos.
Governance Failures and Systemic Weaknesses
The investigation, which stems from documentary analysis, whistleblower disclosures, and records obtained via the Promotion of Access to Information Act (PAIA), paints a grim picture of the centralized student accommodation portal. One of the most startling revelations involves the accreditation of properties, where accreditation agents approved buildings that failed to meet the Department of Higher Education and Training’s (DHET) minimum standards, according to the Department of Higher Education and Training.
Stefanie Fick, OUTA’s Executive Director of Accountability, questioned why NSFAS moved away from functional university systems to outsource critical functions. She noted that when multiple intermediaries are introduced into a pipeline managing billions in public funds, the system becomes dangerously vulnerable if controls are weak. The financial implications are staggering, with four appointed solution providers earning at least 4% of the total amount NSFAS pays for accommodation.
Financial Implications and Governance Red Flags
OUTA estimates these contracts could cost between R600 million and R1 billion over their duration, funds that the organisation argues are being diverted from actual student housing needs to perform functions that NSFAS should handle internally. Furthermore, the report highlights that accommodation providers were forced to pay approximately R33 million to register on the portal, while another R230 million was withheld over an eight-month period in 2025 as a ‘licence fee’. Some of the key findings include:
- Governance red flags were raised regarding the procurement of portal providers, with the NSFAS board ultimately appointing four providers despite a bid evaluation committee initially recommending two.
- The investigation also scrutinised ‘off-take agreements’, long-term leases of up to 20 years with providers, despite NSFAS being unable to provide business plans or board resolutions supporting the initiative.
The NSFAS accommodation model failures have significant implications for the safety and well-being of thousands of students, and it is essential that urgent action is taken to address these governance failures and systemic weaknesses.
