Higher Education and Training Minister Buti Manamela has sounded the alarm over the financial sustainability of the National Student Financial Aid Scheme (NSFAS), warning that its funding shortfall could balloon to R33 billion by 2029 unless government fundamentally rethinks how higher education is financed.
Manamela said the government was already in talks with National Treasury over an estimated R15 billion NSFAS shortfall, describing a funding gap that has grown sharply since the introduction of the current student funding policy.
“We are in talks with Treasury about a R15 billion shortfall. Last year it was R13 billion. The year before it was R7 billion. The year before it was R5 billion. The first year when we introduced the policy was R2.5 billion,” Manamela said.
“Estimates are that by 2029, we would have a shortfall of R33 billion at NSFAS.”
The minister made the remarks during a National Media Group meeting with a Higher Education and Training delegation on Wednesday, where he outlined some of the biggest challenges confronting the post-school education sector.
‘Unsustainable policy’
Manamela said the widening funding gap could not simply be blamed on NSFAS leadership or governance battles, arguing that the underlying problem was the structure of the funding policy itself.
“This is not because there’s an administrator or the board is dissolved, but it’s precisely because we’ve taken a policy which is unsustainable,” he said.
“So it’s either we put up that money and say, here’s all the money, the R33 billion that you will need in the medium term, or we relook at how we distribute this money to people.”
NSFAS remains at the centre of the government’s higher education funding system, with Manamela saying about R56 billion of his department’s budget goes to the scheme.
He warned that instability at NSFAS had consequences stretching far beyond individual student allowances.
“If NSFAS collapses, it means universities do not get their tuition. It’s paying private accommodation. It threatens the student experience, but also people who have generally gotten into providing student accommodation may suffer if NSFAS does.”
While NSFAS successfully funds hundreds of thousands of students, Manamela said even a single student failing to receive an allowance remained unacceptable.
“The concern is not that it successfully pays 800,000 students every year, and it pays them allowances, it pays their tuition and so forth. The concern is the fact that on any given day, one of those 800,000 students may not get their allowance. And one is just too many.”
Income-contingent loans under consideration
Against the backdrop of the escalating funding pressure, Manamela revealed that an income-contingent loan system was among the options being considered for a more sustainable higher education funding model.
Under such a system, students could access education without upfront payment and begin repaying the state only once their post-graduation income reaches a predetermined threshold.
“In the long run, part of the discussions that are being looked at is the possibility of an income-contingent loan to build a sustainable student funding model, so education becomes free at the point of entry for everyone,” Manamela said.
“Once you graduate, we determine the threshold of your income and, on the basis of that, we determine how much you pay back to the state.”
He cited Australia as one country that has implemented such a model, but stressed that any South African version would have to be adapted to domestic circumstances.
“We’ll have to make sure that it works based on our own conditions.”
NSFAS stability and 2027 readiness
Manamela said stabilising NSFAS remained one of his biggest priorities, arguing that stability was not simply a question of whether the institution was governed by a board or an administrator.
“Stabilisation doesn’t only mean whether you have administration or a board, but it also means you have good people as CEO, as senior managers. So that’s the preoccupation now.”
The immediate focus, he said, was ensuring NSFAS was prepared for the 2027 academic year.
“The priority now is to ensure that the board works and it works properly, together with the senior executives at NSFAS, to focus on the 2027 academic readiness, opening up applications, finalising guidelines for funding, fixing student accommodation. Those are the priorities.”
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