Allowances to be paid directly: NSFAS begins process to terminate fintech firms’ contracts

As the National Student Financial Aid Scheme (NSFAS) heads to court to cut ties with the controversial fintech companies, it is expected to introduce a new student allowance payment mechanism.

According to the entity, it was working on the new mechanism of fully paying allowances directly into students’ bank accounts by September.

This was announced by NSFAS administrator Freeman Nomvalo during his first media briefing on Monday since Higher Education Minister Blade Nzimande appointed him on April 12.

He said on Friday they commenced the process to terminate the contracts of irregularly appointed eZaga Holdings, Coinvest Africa, Norraco Corporation, and Tenet Technologies by filling the necessary court papers.

This was done in collaboration with the Special Investigating Unit (SIU). Nomvalo acknowledged that the current arrangement with the companies was not only costly but caused disruptions in the sector.

“NSFAS has taken significant steps towards implementing the recommendations of the Werksmans Attorneys report. This report, which was commissioned by NSFAS, provides a comprehensive analysis of the scheme and identifies areas for improvement, particularly in relation to procurement systems and management deficiencies.

“Furthermore, we have made significant progress in subjecting all implicated NSFAS employees in the report to appropriate disciplinary action. Where appropriate, we will also consider laying criminal charges,” said Nomvalo.

In the meantime, NSFAS has already begun the process for the migration of the students allowance payment system starting with the TVET cohort and university students will continue to receive their allowances through their universities.

The roll-out was dependent on whether the transition would cause disruptions to academic time, which was a concern raised by universities when he met with officials on Friday.

“In order for NSFAS to keep up with the payment of monthly allowances to university students, universities were asked to assist with these processes until the end of July 2024. This payment arrangement underscores the scheme’s commitment to students to receive uninterrupted monthly allowances with precision and without delays.

With regard to the TVET college student allowances, we have devised a payment mechanism to address the payment of allowances for TVET students”.

“As it is the end of May, I’m pleased to announce that the payments that are currently being made are directly to students’ bank accounts as announced,” said Nomvalo.

“We have requested all TVET students who do not have bank accounts to open their bank accounts with banks of their own choice to avoid delays in the payment of their allowances,” said Nomvalo.

A total of R52 billion has been budgeted for 2024/25 and 1 944 538 applications for the bursary including continuing payments students have received.

NSFAS also received about 24 000 new loan scheme applications.

The financial eligibility assessment for all the applicants has been completed.

Successful students are expected to be notified by no later than June 15, 2024.

Nomvalo urged landlords not to evict students as they were sorting out outstanding accommodation payments and reaching out to them in this regard.

“Capacity will be boosted so that we can deal with all outstanding matters by June. We are also reviewing our IT systems to improve our turnaround time and integration,” he said.

Cape Times