William Sezoe
The National Student Financial Aid Scheme has clearly lost sight of reality with the introduction of its new, expensive “direct payment” system.
Beneficiaries will now make use of an NSFAS Mastercard, and the system began this month. It will cost students R12 a month just for in-bundle costs.
Higher Education Minister Blade Nzimande introduced the new NSFAS Mastercard in September last year, for reasons of having “a secure and student-centred approach” to allowance payments, which includes the payout of book allowances at the beginning of the year, personal care allowances, travel allowances and living allowances.
Many students and student leadership structures welcomed the idea of direct payments at the time. However, the how of the direct payment was vague until recently, when NSFAS unveiled the names of the service providers.
In an investigation report by the Organisation Undoing Tax Abuse (Outa), it was found that all four of the providers – Coinvest Africa, Tenet Technology, Ezaga Holdings and Norraco Corporation – were young and inexperienced companies.
Outa found that far more reputable, experienced and known banks applied for the contract but were unsuccessful.
This raised doubt and suspicion about how four young and inexperienced companies got the contract.
Notably, Outa found that the CEO of the NSFAS, Andile Nongogo, at some point during his tenure as Seta CEO, had a “business relationship” with a family group who had directorship in Coinvest.
Nonetheless, each of the companies is mandated to service several universities and colleges, with Stellenbosch University being one of them. In a recent meeting with NSFAS officials and Coinvest at SU, questions were raised about how exactly the new system would work and, particularly, how much it would cost students. The cost of the NSFAS Mastercard were shared in this meeting, revealing that students would pay R12 a month, along with various other costs for out-of-bundle transactions.
The cost sheet shows that students will pay about R60 to replace a card and R50 to have it delivered. It will cost R8 to have the pin reset, R8 if the card is declined at an ATM, and R20 if an ATM swallows the card.
Comparing the prices to well-known and reputable banks such as Absa, for example, which has a student account with zero monthly fees and free perks like 100MB data a month, shows how ridiculously expensive the exercise will be for NSFAS students.
It boggles my mind that the NSFAS, which has a mandate to serve the most vulnerable and poor students, would opt to go for expensive banking (not that we can call it banks – Outa also found that the companies were not registered as financial service providers).
This while we live in a country where the cost of living is high. Students will have to cut their allowances even more as they will have no choice but to carry the underlying costs of the new system.
What is even more mind-blowing is the amount of money the companies will walk away with after their contracts expire.
The NSFAS recently confirmed that it would fund more than a million students this year. If we were to do the maths, each of the companies would walk away with billions of rand after their five-year contracts had expired.
Why NSFAS would reinvent the wheel is beyond me. The simplest solution would have been to pay the money directly into the personal bank accounts of students. I am pretty sure that all students have bank accounts of their choice, and if not, a bank account must be one of the requirements to receive funding from the NSFAS. That makes more sense than what NSFAS has come up with.
People in general must have the option of selecting a bank of their choice, one they want to associate themselves with and can build a solid relationship with.
This is what we call financial emancipation; it’s not that difficult. Forcing students into this system is neither beneficial nor cost-effective.
If the NSFAS and minister do not urgently reapply their minds regarding the system, charging the poor and most vulnerable “banking” charges would create tension and frustration among the student population and could lead to massive student protests across the country.
Sezoe is the Stellenbosch University (SU) SRC vice-chairperson and member of the DA Student Organisation FedEx.
Cape Times