A new report by the Organisation Undoing Tax Abuse (OUTA) has raised concerns about how billions of rand allocated for student accommodation are being managed through the National Student Financial Aid Scheme (NSFAS).
The findings follow a two year investigation that examined governance practices, procurement processes and accommodation standards within the NSFAS housing system. The report builds on earlier findings published in December 2023 and includes additional information obtained through the Promotion of Access to Information Act and whistleblower disclosures.
OUTA said structural changes to the accommodation funding model have introduced several intermediaries into the payment system, complicating the process and increasing the risk of inefficiencies and potential abuse of public funds.
The report also raises concerns about the accreditation process for student housing. According to the investigation, some accreditation agents allegedly approved properties that did not meet required standards. In one example cited, a property registered as offering 200 beds was reportedly a standard three bedroom house.
Questions were also raised about procurement decisions linked to companies managing the accommodation portal. OUTA found that the NSFAS board appointed four service providers despite the evaluation committee recommending only two. One of the selected companies had previously been disqualified before being reinstated.
Financial arrangements within the accommodation system have also come under scrutiny. OUTA reported that NSFAS deducts a five percent service fee from accommodation payments before funds are distributed, adding another financial layer to the system.
The organisation further highlighted concerns about long term lease agreements introduced during the tenure of former NSFAS CEO Andile Nongogo and former board chair Ernest Khosa. Investigators said supporting documentation for the development of these agreements could not be produced, raising questions about governance and oversight.
Another issue identified in the report is a mismatch between the number of accredited beds and the number of beds funded by NSFAS at some institutions. OUTA warned that this discrepancy could indicate either poor allocation of resources or the possibility that some accommodation capacity exists only on paper.
The organisation said that although many accommodation providers comply with the minimum standards set by the Department of Higher Education and Training, the broader governance framework requires stronger monitoring and accountability.
OUTA has called for a full audit and physical inspections of the affected properties. The report will also be shared with the Auditor-General of South Africa and the Special Investigating Unit (SIU), which is already probing aspects of NSFAS operations.
In response, NSFAS acknowledged the report and said it would review the findings and recommendations. The scheme noted that it had been engaging with OUTA and had provided information through PAIA processes as part of efforts to strengthen transparency.
NSFAS said it has already begun implementing reforms following a legal and forensic review of the student accommodation system. These changes include shifting toward direct payments to accommodation providers instead of relying on solution partners, with the transition expected to continue throughout 2026.
The scheme also confirmed that the SIU investigation into student accommodation is ongoing under a Presidential Proclamation and that NSFAS is cooperating fully. A national audit of accredited student accommodation is also planned for 2026.
For the current academic year, NSFAS said new control measures have been introduced to improve student registration processes, accommodation placement and the timely payment of providers.
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