South African universities face a R5 billion crisis which threatens them and their students

Ballooning student debt has emerged as one of the biggest threats to the sustainability of top South African universities.

This problem has been worsened by the instability and mismanagement of the National Student Financial Aid Scheme (NSFAS), putting universities in an untenable position.

This was revealed in the 2025 annual reports from some of South Africa’s top universities.

This includes North-West University (NWU), the University of Cape Town (UCT), the University of Johannesburg (UJ), the University of Pretoria (UP), and the University of South Africa (Unisa).

All five of these universities highlighted growing student debt and the NSFAS funding crisis among their top concerns.

Across these five institutions, gross student fee debt totals R5.08 billion, which represents the total nominal fee amount owed by registered and past students before accounting for uncollectable debt.

As South Africa’s largest university, Unisa faces the biggest burden, with its gross student debt totalling R1.40 billion in 2025.

Unisa had to raise a R781.7 million provision in 2025 for expected losses on this debt, which translates to a 55.7% loss rate.

Separately, Unisa also carries a direct gross exposure of R1.28 billion from NSFAS itself, against which it has raised a R1.13 billion credit loss provision.

Many universities lay the blame for rising student debt at least partially at NSFAS’ feet, highlighting how mismanagement of the fund has contributed to this issue.

NWU said in its annual report that the national financial aid scheme is “poorly designed and ineffectively implemented”.

The university said free higher education through NSFAS is not financially sustainable in its present form, as the long-term liability “ultimately rests with society”.

In its 2025 financial year, NWU had to absorb funding volatility, delayed registration clearance, R45.8 million in write-offs, and growing NSFAS receivables of R299.9 million.

NSFAS issues raised by universities

One of the issues universities raised regarding how NSFAS is managed and structured concerns its ‘N+1’ completion rule.

This rule provides students with financial aid for the minimum time required to complete a qualification (N), plus one extra year to allow for academic delays or repeats.

If a student passes the N+1 limit, NSFAS funding stops, and the student becomes responsible for paying their remaining tuition and fees.

In their 2025 annual reports, the universities criticised this rule and NSFAS’s mid-year enforcement of it, explaining that it has caused severe financial distress.

NSFAS applies this rule, as well as income re-verifications mid-academic year, meaning it will abruptly revoke funding after students have already registered and started attending.

Once defunded, the student’s tuition and accommodation balances are reclassified as self-funded debt.

For example, in UJ’s case, NSFAS defunded students under the N+1 rule, resulting in R14.7 million in student aid being reclassified as self-funded debt. 

This contributed to UJ’s outstanding student debt, which rose to R1.21 billion in 2025. The university said it is virtually impossible to collect fees from students who were defunded mid-year.

To support students, UJ reprioritised R20 million from unused internal bursaries to cover the costs for defunded students who were close to completing their degrees.

Since NSFAS also covers some students’ accommodation, UJ’s private off-campus student accommodation unit mediated for 401 defunded students facing eviction from private landlords.

The University of Cape Town also raised a separate issue with NSFAS’ accommodation funding.

NSFAS caps its annual student accommodation allowances depending on whether the institution is located in a metro or non-metro area and whether the residence is catered or non-catered.

UCT explained that this cap resulted in an “insurmountable” accommodation shortfall of R110 million for 3,200 of its students in residences.

The university said this also fueled protests at the institution at the start of the 2025 academic year.

UCT’s gross student debt rose to R1.01 billion in 2025, with the university having raised provisions to R617.9 million for expected losses.

This is only slightly higher than at UP, where gross student debt reached R940.5 million in 2025, with a provision of R421.9 million.