PRETORIA, Gauteng — To combat the escalating university funding crisis in South Africa, higher education experts are urgently advocating for SARS automatic deductions to recover outstanding NSFAS debt from employed graduates. As public institutions grapple with over 10.5 billion rand in unpaid financial aid obligations, Professor Sioux McKenna, Director of the Centre for Postgraduate Studies at Rhodes University, emphasizes that relying on graduates to voluntarily remember and repay their loans is no longer a viable strategy for the survival of the sector.
The financial bottleneck facing public universities is severe. Delayed disbursements have left institutions carrying massive unpaid student debt, including 1 billion rand owed to the University of the Free State and 1.2 billion rand at North-West University. This shortfall is exacerbated by an unyielding student accommodation cap and persistent administrative instability within the financial aid scheme, placing the very sustainability of higher education under immediate threat.
According to Professor McKenna, the burden of this deficit is not shared equally. Well-endowed universities are quietly subsidizing the government’s statutory schemes by footing the bill from their own reserves. However, institutions without substantial investments cannot absorb these costs, forcing the burden onto vulnerable students. Consequently, learners are left waiting for basic accommodation and food funding, with some resorting to squatting with relatives or begging on the streets to survive.
While NSFAS has attempted to deflect blame by accusing private landlords of price gouging, Professor McKenna acknowledges that while the exploitation of desperate students is a real problem, it is not the primary driver of the administrative chaos. In reality, self-funded students make up the bulk of the debt owed directly to universities. Institutions consistently battle with ineffective debt recovery mechanisms, leading to financial exclusion for current students and leaving graduates to enter the workforce burdened by enormous, often unpaid, debt.
To address this, experts are calling for a robust, automated partnership between universities, NSFAS, and the South African Revenue Service (SARS). Tebogo Letsie, chairperson of the committee on higher education, recently indicated that only a marginal number of students transition from graduation to the workforce without repaying their debt. While Professor McKenna noted she could not verify the exact statistics, she agreed that South Africa must be bold in implementing aggressive recovery mechanisms.
She advocates for a proportional reclaiming of debt based on a graduate’s income level, deducted automatically at the source before the salary is paid. This would eliminate the reliance on individuals to set up manual stop orders. This approach aligns with previous proposals, such as a recommendation from the Ministry of Trade and Industry to have credit bureaus blacklist students who default on their obligations.
However, Professor McKenna stressed that debt recovery is only one piece of the puzzle. The fundamental design of the financial aid system requires urgent restructuring, as the current model is unsustainable and risks total collapse.
A core issue is that NSFAS has effectively become the largest per capita social grant in South Africa. It is no longer just an education grant; it is a housing, food, and book purchase grant. For students from households earning under 350,000 rand annually, this financial influx often exceeds the combined income of a grandparent’s pension or a standard SASSA grant. Inevitably, the student becomes the family breadwinner, and the funding is diverted to feed the household and provide subsistence accommodation, rather than supporting academic success.
To resolve this, Professor McKenna suggested splitting the grant: the education portion should be directed straight to the student or the university, while the subsistence components should be channeled into broader, existing social grant mechanisms.
Another alternative is reverting to the older model where funding flowed directly from the National Treasury to universities. While this system operated efficiently in most cases, audits have previously found that a few institutions failed to manage the money transparently. Furthermore, the modern administrative load of managing comprehensive living expenses for a massive demographic would overwhelm most university finance departments today. Direct Treasury-to-student payments also present challenges, as they still require a highly robust system to verify eligibility and disbursement amounts.
The financial strain is already crippling daily university operations. With cash flow blocked by unpaid funds, institutions without massive financial reserves are being forced to implement severe budget cuts to staffing and infrastructure. Alarmingly, the NSFAS budget now eclipses the university block grant budget. This means institutions receive less funding to cover basic operational costs like electricity and salaries than what is allocated to the national student aid scheme.
As the higher education sector faces the reality of doing more with less, stakeholders agree that without decisive, systemic intervention and modernized, automated debt recovery partnerships with SARS, the current funding model will not hold.
