National Student Financial Aid Scheme Faces Backlash Over Middleman Fees and Costly Contracts
NSFAS Corruption Concerns: The National Student Financial Aid Scheme (NSFAS) has come under fire for awarding contracts worth over R200 million to four solution providers, leading to significant financial controversy. Amid growing concerns, NSFAS has announced that it will conduct a legal review of these contracts, with plans to transition the management of student accommodation back to higher education institutions by 2026.
The Issue: Middleman Contracts Under Scrutiny
The controversy stems from the appointment of four solution providers tasked with managing student accommodation processes. These providers, identified as Tenet Technology, eZaga, Norraco Corporation, and Coinvest Africa, were contracted to design online portals where private accommodation providers could list available rooms for students.
In exchange for their services, the intermediaries charged a 5% administration fee on every room rented out to students. This fee, deducted from the rental payments, has sparked outrage among accommodation providers, many of whom claim that the charges are excessive and unwarranted.
NSFAS acting CEO Waseem Carrim recently informed the Portfolio Committee on Higher Education that these contracts were deemed “deeply problematic” and lacked sufficient transparency and oversight. Additionally, the Special Investigating Unit (SIU) has also flagged the accommodation process for a review, pointing to the complexity and inefficiency of the current system.
Financial Implications and Student Impact
According to data presented to Parliament, the four solution providers were paid approximately R145 million in 2024 and R69 million so far in 2025. Critics argue that this money could have been better allocated to support more students who are currently struggling to secure accommodation.
EFF MP Sihle Lonzi voiced his frustration, stating, “Comrades want to eat, so they create unnecessary middlemen. We are just making people rich at the expense of students.”
This situation has also affected landlords, who face delayed payments and reduced revenue due to the 5% administration fee. Walter Tebogo Letsie, chairperson of the Portfolio Committee on Higher Education, questioned why NSFAS continues to rely on middlemen to manage accommodation payments when the process could be more efficiently handled directly.
Calls for Reform and Legal Action
Carrim has admitted that the current system is overly complex and has not met its intended goals. As a result, NSFAS is determined to implement the recommendations from the legal review and work towards a more straightforward and efficient approach to managing student accommodation.
Kagisho Mamabolo, CEO of the Private Student Housing Association, expressed dissatisfaction with the current setup, stating that the high intermediary fees threaten the long-term stability of private student housing. He urged NSFAS to expedite the review process and engage directly with stakeholders to find sustainable solutions.
Future Prospects and Reformation Plans
NSFAS aims to transfer the management of student accommodation back to higher education institutions by 2026, which could reduce financial burdens and improve the quality of service for students. The government body plans to meet with Universities South Africa this month to devise a transitional framework.
As the review progresses, stakeholders are calling for more transparent and student-centered policies to address the ongoing housing crisis. There is a growing consensus that eliminating unnecessary intermediaries would free up funds to support more students and improve accommodation standards.
Also read: NSFAS Payment Delays Put Student Accommodation at Risk, Trigger Eviction Threats
