NSFAS and the Middle-Class Capture – Unpacking the Challenges of Free Higher Education in South Africa. The National Student Financial Aid Scheme (NSFAS) was introduced as a transformative policy to expand access to higher education for financially disadvantaged students.
However, recent research suggests that instead of fully benefiting the most vulnerable students, the policy has inadvertently favored middle-class households, raising serious concerns about its effectiveness and sustainability.
A national research report on Student Funding, Access, and Success in Public Higher Education in South Africa—produced by the Ali Mazrui Centre for Higher Education Studies (AMCHES) in collaboration with the Council on Higher Education (CHE)—sheds light on how the NSFAS funding model has evolved and where it has fallen short.
This study, conducted over five years (2019-2024), evaluates the post-2017 ‘free higher education’ policy and highlights systemic weaknesses in student funding and higher education financing.
The Evolution of Free Higher Education in South Africa
The introduction of free higher education in 2018 marked a major policy shift aimed at alleviating financial burdens for students from lower-income households.
The reform converted NSFAS loans into full bursaries and raised the household income threshold to ZAR350,000 (approximately US$19,200) per annum, expanding eligibility. While this policy was positioned as a progressive step toward educational equity, the reality is far more complex.
Middle-Class Capture: Who Truly Benefits?
The NSFAS funding model, intended to bridge socio-economic disparities, has instead disproportionately benefited middle-income students rather than the poorest. According to the report:
- 58% of the increase in NSFAS beneficiaries (2017-2019) came from households in the top third of South Africa’s income distribution.
- 29% of NSFAS funds in 2019 were allocated to students from households earning above the previous threshold of ZAR122,000, compared to just 9% in 2017.
This misalignment suggests that students from better-resourced backgrounds—who generally perform better academically—are more likely to secure NSFAS funding, leaving the most vulnerable students at a disadvantage.
Data Challenges and the ‘Invisible Poor’
A major concern identified in the study is the lack of verified household income data, which complicates the fair allocation of NSFAS funds.
- In 2017, 26% of NSFAS applicants had missing income data. By 2019, this number increased to 44%.
- The absence of verifiable financial records raises questions about NSFAS’ ability to equitably distribute funding, leaving the system vulnerable to fraud and inefficiencies.
The Hidden Costs of ‘Free’ Higher Education
While the policy of free higher education was designed to ease financial barriers, its implementation has resulted in several unintended consequences:
1. Fiscal Unsustainability
The transition to a full bursary model has significantly increased public spending on higher education.
- NSFAS expenditure surged from ZAR6.97 billion in 2014 to over ZAR45.43 billion in 2022-2023, placing enormous pressure on South Africa’s already strained fiscal resources.
- Given the country’s economic stagnation and high debt levels, many are questioning whether this funding model is viable in the long term.
2. Reduced Student Accountability
The removal of student loan obligations has unintentionally decreased academic accountability. Without financial consequences tied to academic performance, some students may lack the motivation to complete their studies efficiently. While minimum course pass requirements have been introduced, challenges remain in ensuring that bursary recipients graduate within the expected timeframe.
3. Universities’ Response and Quality Concerns
Higher education institutions, particularly those receiving government subsidies linked to student progression rates, have adapted their policies to align with the new funding model. However, this has led to:
- Grade inflation to increase throughput rates.
- Compromised academic quality as institutions prioritize financial incentives over education standards.
Exacerbation of Inequality: Who Gets Left Behind?
Ironically, while NSFAS was designed to reduce inequality, the policy has led to a situation where:
- Many rural and low-income students face funding accessibility challenges due to administrative inefficiencies.
- A significant portion of NSFAS funding was allocated to distance-learning students, particularly at UNISA, where dropout rates are the highest.
- Students from well-resourced schools are more likely to navigate the application process successfully, leaving the most vulnerable behind.
Rethinking the Higher Education Funding Model
The evidence suggests that South Africa’s current student funding model is flawed, unsustainable, and inequitable, requiring urgent reform. Key recommendations include:
1. Implementing a Targeted Means-Tested Funding Model
- Financial aid should be distributed progressively, ensuring that lower-income students receive full funding, while middle-income students contribute proportionally.
- A rigorous means test should be introduced to prevent middle-class capture and prioritize the most disadvantaged students.
2. Linking Bursaries to Performance
- Performance-based funding should be introduced to incentivize students to complete their studies within the expected timeframe.
- Universities should be encouraged to balance accessibility with academic excellence, ensuring that increased enrolment does not come at the expense of quality education.
3. Improving NSFAS’ Data Collection and Verification
- Enhancing income verification processes will prevent misallocation of funds and improve the transparency of funding allocations.
- Leveraging technology and AI-driven data analysis can enhance the efficiency and accuracy of NSFAS funding assessments.
4. Ensuring Long-Term Fiscal Sustainability
- The government must conduct a comprehensive review of higher education financing to ensure a financially viable and equitable funding model.
- A hybrid funding approach: combining bursaries, partial loans, and work-study programs—could help distribute financial responsibility more effectively.
Conclusion
The research findings highlight deep-rooted challenges within South Africa’s higher education funding system. While the policy shift to free higher education aimed to promote access and equity, it has inadvertently widened socio-economic disparities and placed an unsustainable financial burden on the state.
