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Nsfas Direct Payment System a Study on How to Fail Poor Students



Nsfas Direct Payment System a Study on How to Fail Poor Students

Nsfas Direct Payment System a Study on How to Fail Poor Students.The introduction of the new “direct payment” system by the National Student Financial Aid Scheme (NSFAS) demonstrates a concerning detachment from reality. Under this system, beneficiaries will be issued an NSFAS Mastercard starting in July, which will incur a hefty monthly fee of R12 for in-bundle costs.

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Nsfas Direct Payment System a Study on How to Fail Poor Students

Minister Blade Nzimande initially presented the NSFAS Mastercard in September of the previous year, aiming for a secure and student-focused approach to allowance payments. These allowances include book allowances at the beginning of the year, personal care allowances, travel allowances, and living allowances.

While the concept of direct payments was met with enthusiasm by many students and student leadership structures, the specifics of the direct payment process remained unclear until recently when NSFAS disclosed the service providers.

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Report by Organisation Undoing Tax Abuse

In an investigative report conducted by the Organisation Undoing Tax Abuse (Outa), it was discovered that all four service providers—Coinvest Africa, Tenet Technology, Ezaga Holdings, and Norraco Corporation—are relatively young and inexperienced companies.

The same report revealed that numerous well-established and reputable banks had applied for the bid but were unsuccessful. This raises significant doubts and suspicions regarding how four inexperienced companies secured the bid successfully.

Notably, the report also highlighted that the current NSFAS CEO, Andile Nongogo, had a previous “business relationship” with a family group associated with Coinvest during his tenure as SETA CEO. This revelation adds validity to the concerns and suspicions surrounding the bidding process.

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William Sezoe Nsfas Direct Payment System: A Study on How to Fail Poor Students

However, these companies have been assigned the responsibility of servicing multiple universities and colleges, including Stellenbosch University (SU).

During a recent meeting between NSFAS officials, Coinvest, and SU, numerous questions were raised regarding the functioning of this new system and, specifically, the financial impact on students.

In this meeting, the cost structure of the NSFAS Mastercard was shared, revealing that students will be charged R12 per month, along with additional fees for out-of-bundle transactions. The cost breakdown indicates that replacing a card will cost approximately R60, delivery charges will be R50, resetting the PIN will incur a fee of R8, an ATM decline will cost R8, and if an ATM swallows the card, a charge of R20 will apply.

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When comparing these prices to those offered by well-known and reputable banks like Absa, which provides a student account with zero monthly fees and free benefits such as 100MB of monthly data, the exorbitant expenses imposed on NSFAS students become evident. It is perplexing that NSFAS, entrusted with serving the most vulnerable and financially challenged students, has opted for such costly banking options (although these companies are not registered as financial service providers, as highlighted by Outa). This decision is particularly troubling considering the already high cost of living in our country.

As a result, students will be forced to further reduce their allowances to accommodate the underlying costs of this new system.

What is even more astonishing is the substantial amount of money these companies will accumulate once their contracts expire. NSFAS recently confirmed that it will provide funding to over 1 million students this year. By doing the math, it becomes apparent that each of these companies stands to gain billions of rand when their five-year contracts conclude.

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The rationale behind NSFAS’s decision to reinvent the wheel escapes me. The simplest solution would have been to directly deposit the funds into the personal bank accounts of students. It is highly likely that the majority of students already possess existing bank accounts of their choice, and if not, having a bank account should be a prerequisite for receiving NSFAS funds. This approach would make more sense than the one adopted by NSFAS.

People, in general, should have the freedom to select a bank that suits their preferences and establish meaningful relationships with it. This is what financial emancipation entails, and it is not a complex concept. However, coercing students into a specific system is neither advantageous nor cost-effective.

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Subjecting the already impoverished and vulnerable students to banking charges will only foster tension and frustration among the student population. If NSFAS and the minister do not urgently reconsider this system, it could lead to widespread student protests across the country.

  • William Sezoe, Stellenbosch University SRC Vice-Chairperson and member of the DA student organization FedEx.

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