‘Fraudulent’ withdrawals from NSFAS-funded students’ accounts threaten their future

NSFAS chief executive officer, Andile Nongogo. FILE PIC

NSFAS chief executive officer, Andile Nongogo. FILE PIC

Published Apr 16, 2023


HUNDREDS of government-funded students have been left in the lurch after glitches and alleged hacks of a new banking system disbursing allowances.

The National Student Financial Aid Scheme (NSFAS) hired four service providers to disburse student allowances over a five year period.

The tender for the programme, estimated to cost about R1.5 billion, was awarded to Norraco Corporation, Coinvest Africa, Tenet Technology and Ezaga Holdings.

NSFAS announced last year that it would no longer pay student allowances through institutions but would introduce a Mastercard System, now being run by the third party and piloted at some Training and Vocational Education Training Colleges across the country.

Some college students at various campuses in the Western Cape told the Weekend Argus of an alleged scam, fraudulent withdrawals and exorbitant bank service fees which left them with zero balances in their accounts.

Now they faced an uncertain future because of the "unabated scam", and with no help or intervention from NSFAS, they said.

“I am thinking of packing my bags and going back to the Eastern Cape,” said a student at the Boland College Caledon campus who had yet to receive her private accommodation and living allowances.

While NSFAS is paying over R166 million for renting office space, some students said they had been “evicted” from homes they rented because they had not received allowances or had been “scammed”.

Other students reported receiving notifications that allowances of up to R13 000 had been deposited into their Norroca accounts but before they could withdraw the funds, some individuals who were identified as Joy Monza, Magandula, Mohammed or Nonja in the bank statements had already taken the money.

“It normally happens around midnight or the very early hours of the morning, around 3am or 4am,” said another student at the Boland College, Stellenbosch, campus.

“When I finally managed to get through to the Norraco people they suggested that I had shared my personal details with friends or family members who then withdrew the money. That was a lie, and I told the assistant.”

Several students from different campuses also said they had been told the same thing. Their allowances had been “stolen” by the same individuals.

“It's a fraud. The same individuals are involved in the scam. One minute you think you have R13 000 in your account and the next second it reflects R113,” the student said.

They said the only people who were custodians of their personal details were the service providers.

When NSFAS made announcements on the new banking system the institution promised that an onboarding process would be embarked upon for the students.

The students were also promised new MyNSFAS bank “black cards”.

The majority of the students were not issued with the card. Even though some were in possession of it, the allowances had not been paid directly into them.

All the students that Weekend Argus spoke to said they had never been trained on how the process worked but they learnt from each other.

“I was told by my fellow students that all I needed to register was to go on the internet and download the service provider’s app. It then asked me to upload my picture, copy of ID and proof of address.”

The South African Further Education and Training Students Association (Safetsa) said it was aware of the challenges faced by the students.

Safetsa secretary-general Wongani Mgwali said: “It’s a frustration with students. It appears that the new system is not secure and is easily hacked.”

Mgwali said in other instances students had given details to fellow students claiming that they would be able to resolve their challenges.

Once the allowance reflected in the e-accounts, students could only transfer the amount into their bank accounts, with any financial institution or into an e-wallet.

However, some said it was a long process to receive an OTP to complete the transaction and they would abandon it.

"Strangely a few hours later, in the dead of the night, I saw that an amount of R2 000 was withdrawn by a Joy," said another student from Boland College in Caledon.

Some students complained that they still had not received their allowances and NSFAS was “nowhere to be found” to provide an explanation.

Said a student: “What is most frustrating with this new system is that NSFAS is not taking accountability for this mess. Unlike in the past when we could go to the student aid office on campus and have our problems resolved, there's no one we can go to now. Norraco also does not have representatives on campuses.”

The Organisation Undoing Tax Abuse (Outa) conducted an investigation into the tender and found that at the time it was awarded, three applicants did not have the required banking licences and VAT registrations to make direct payments of student allowances.

The rates the service providers were offering were also “excessive” compared to the financial institutions.

“We believe these tender awards are irregular. We question whether awards such as these are unnecessarily draining NSFAS resources and contributing to its cuts to student subsidies'”, said the civil rights organisation.

Outa questioned the value of the contracts, “particularly in the light of the NSFAS reduction of subsidies for student accommodation,” said Rudie Heyneke, Outa’s portfolio manager on the project.

Costs deducted from the bank accounts ranged from R50 to R70 for an EFT debit fee to a R29 monthly management fee.

Commercial banks, who also submitted bids for the tender but were not awarded, offered structured accounts for students with low banking fees and other value-added services.

Some charged R10 while one charged R27.

While the NSFAS Mastercard promised no fee charges for up to three point-of-sale cash withdrawals, other commercial banks had an unlimited number.

NSFAS did not respond to questions sent and Norraco could not be reached through email or telephone.

Related Topics:

nsfasmoney matters