R56 billion state-run scheme running out of money

The Minister of Higher Education and Training, Buti Manamela, has revealed a growing budgetary shortfall at the National Student Financial Aid Scheme (NSFAS).

Despite the fund receiving an annual budget of R56 billion from the South African government, Manamela said NSFAS faces a R15 billion shortfall.

Manamela said this deficit could double within the next three years unless the government intervenes to reassess the scheme’s funding model.

He made these remarks during a meeting between National Media Group and a delegation from the Ministry of Higher Education and Training, which took place on Wednesday, 9 September 2026.

“We are in talks with Treasury about a R15 billion shortfall,” Manamela said. “Last year it was R13 billion. The year before it was R7 billion, and the year before that it was R5 billion.”

“The first year when we introduced the policy was R2.5 billion. Estimates are that by 2029, we would have a shortfall of R33 billion at NSFAS.”

Hundreds of thousands of South African students depend on NSFAS for funding, with 660,000 students confirmed for 2026 alone.

In August 2026, it was revealed to Parliament that the scheme had paid only 61.5% of its university funding allocations up to that point.

This meant that NSFAS still owed R10.49 billion in 2026 tuition fees to South Africa’s universities. It is not known how much of this amount has been paid since.

Manamela said this funding gap should not be attributed solely to the scheme’s administrative problems, but also to the structure of its funding policy.

“This is not because there’s an administrator or the board is dissolved,” Manamela said. “It’s precisely because we’ve taken a policy which is unsustainable.”

“So, we either put up the money and say, ‘Here’s the R33 billion you will need in the medium-term’, or we relook at how we distribute this money to people.”

A plan to fix NSFAS

With the reveal of the growing funding shortfall at NSFAS has come greater calls for a review of its funding model.

According to Manamela, discussions around more sustainable funding solutions have included the potential introduction of an income-based loan system.

Here, students would be able to access tertiary education without paying upfront fees and would only need to repay them once their post-graduation income reaches a certain threshold.

“Part of what’s being looked at is the possibility of an income-contingent loan to build a sustainable student funding model, so education becomes free at the point of entry for everyone,” Manamela said.

“Once you graduate, we determine the threshold of your income and, on the basis of that, we determine how much you pay back to the state.”

Manamela pointed to Australia as an example of a similar student funding system, but said that a South African interpretation would need to be adapted to fit domestic conditions.

While these discussions are still ongoing, calls have been growing for a more immediate plan to be implemented.

National Assembly Member Dr Delmaine Christians criticised Manamela for failing to produce an interim crisis plan that will enable NSFAS to pay the money it owes.

She called for an urgent review of the NSFAS Act and for the decentralisation of student funding administration, so that institutions are more responsible for delivering their own funding directly to students.

“NSFAS has moved from governance failures to outstanding payments to registration difficulties and now to a projected multibillion-rand funding hole,” Christians said.

“After a year of turmoil under Buti Manamela, the question is increasingly whether he is capable of providing the decisive leadership required to fix the institution under his watch.”

Manamela’s decision to dissolve the NSFAS board in May 2026 and appoint an administrator to oversee the scheme was overturned by the Pretoria High Court in August.

The seven-member board was subsequently reinstated, while Manamela’s appointment of Professor Hlengani Mathebula as NSFAS administrator was suspended.