The National Student Financial Aid Scheme (NSFAS) has revealed a staggering R10.6-billion budget shortfall for universities in the 2025 academic year. This funding crisis is leaving thousands of students unable to register for the second semester and placing many others in financial limbo, particularly those whose registration data was received after the 31 March deadline.
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NSFAS CEO Waseem Carrim and board chairperson Karen Stander briefed the media in Pretoria on Wednesday, 27 August, highlighting the severity of the situation.
“NSFAS faces quite a significant budget shortfall for the 2025 academic year. We have a R39-billion allocation for the university sector, and we have disbursed almost 73% of that, which is approximately R29-billion, but we do face a budget shortfall of about R10.6-billion,” said Carrim.
Stander explained that the shortfall stems from multiple factors:
- Rising student eligibility: More students qualify for financial aid due to increased enrolments.
- Cost-of-living pressures: Inflation and household expenses have expanded the number of students needing NSFAS support.
- Declining state resources: Funding in real terms has not kept pace with demand.
In the TVET college sector, NSFAS has a R9.12-billion budget, with over 70.6% already disbursed, yet the shortfall still stands at R1.6-billion.
“The root cause lies in a funding model that promised more than the resources available without adjusting eligibility criteria accordingly,” said Stander.
The Human Cost: Students in Limbo
The national convenor of Mayibuye iAfrika Youth League, Keamogetswe Masike, warned that the funding gaps could severely impact students in 2026.
“We’re going to kill a lot of dreams and aspirations because some of these kids are doing serious career courses, which require full participation in class,” Masike said.
The shortfall affects not only registration but also mental health, as uncertainty over funding creates stress and anxiety among students, many of whom come from financially vulnerable households.
Student Loan Repayments and NSFAS Sustainability
Carrim stressed the importance of recovering previous loans. NSFAS is owed R45-billion by students who took loans before 2018.
“Students who benefited from these loans and are now employed must pay back their debt — not only for themselves but also to ensure funds are available for future students,” he said.
This repayment is critical to sustainability, as NSFAS relies on recycling funds to support new generations of students.
Administrative and Operational Challenges
Decentralisation
Since 2022, NSFAS has been paying over R2.5-million a month for office space in Cape Town. Plans are underway to relocate to Pretoria, while the Special Investigating Unit (SIU) and Special Tribunal address contractual issues with the Cape Town building.
Backlogs of Appeals
More than 5,000 student appeals remain unresolved. NSFAS received 87,121 appeals from first-time entrants, returning applicants, and continuing students. Of these, 14,700 appeals were rejected, and nearly 6,000 remain unresolved. Students are urged to submit all required documents to avoid delays.
Accommodation Crisis
Student accommodation is also under strain. NSFAS owes landlords R62-million from 2024 and 2025. This has led to threats of legal action by the Private Student Housing Association. NSFAS currently covers 329,038 beds at 23 TVET colleges and 17 universities, but payment delays and commission fees to service providers have sparked criticism from MPs.
Corruption and Mismanagement
NSFAS has acknowledged instances of corruption, maladministration, and potential fraud. The board is collaborating with the Auditor-General, Public Protector, and SIU to address these challenges.
ICT and System Failures
Delays in processing applications and appeals are compounded by ICT failures. System outages have caused registration bottlenecks and delayed payments to both students and accommodation providers, further fueling frustration and uncertainty.
Government Accountability and Policy Responses
The funding shortfall raises questions about government planning and accountability. Analysts argue that NSFAS has been underfunded for years, despite increasing enrolments and rising living costs. Proposed solutions include:
- Adjusting eligibility criteria to focus on students most in need.
- Increasing government allocations to meet the rising demand.
- Strengthening loan recovery mechanisms to ensure recycled funds reach future students.
- Improving transparency in procurement, accommodation payments, and administrative costs.
Broader Implications for South African Students
The R10.6-billion shortfall is more than a number — it is a barrier to education, career growth, and economic mobility for thousands of young South Africans. Students unable to register or access accommodation risk delayed graduation, increased financial strain, and potential career setbacks.
Experts warn that without urgent intervention, this funding crisis could lead to long-term consequences for the country’s higher education sector and the broader economy.
Moving Forward
NSFAS has committed to addressing the shortfall through:
- Accelerating loan repayments from previous beneficiaries
- Resolving outstanding appeals within 45 days
- Reviewing student accommodation and third-party partnerships
- Relocating operations and ensuring better fiscal management
While these measures are steps in the right direction, students, parents, and educators remain anxious about the immediate impact on student futures.
