A new report by the Organisation Undoing Tax Abuse (Outa) has raised serious concerns about how billions of rand meant for student housing are managed by the National Student Financial Aid Scheme (NSFAS).
The report follows a two-year investigation into corruption, weak oversight and problems in the student accommodation system that thousands of students rely on every year. Outa said changes to the system may have affected how public money flows through the student accommodation pipeline.
According to Outa, major changes were made to the student accommodation system in recent years.
In the past, universities mainly managed student accommodation placements themselves. But under a new system, a central online portal was created and outside companies were appointed to manage parts of the process.
These changes were introduced during the leadership of former NSFAS CEO Andile Nongogo and former board chair Ernest Khosa.
Outa executive director for accountability Stefanie Fick said the new system added more parties to the process.
“There were already accommodation placement systems operating successfully at many universities,” she said.
“Instead of building on those systems, NSFAS introduced a new portal and outsourced critical functions to external service providers and accreditation agents.”
Outa flagged the appointment of four “solution providers” hired to run an online housing portal. The report claims these appointments were “irregular” because the then-CEO was directly involved in picking the winners.
According to the report, the appointment of Training Young Minds (TYM) was irregular because the company had already been disqualified during the first round of evaluation.
Outa found that a director of TYM was a former business partner of Nongogo.
These providers collected more than R6.7m in registration fees from landlords. In addition, they were set to earn roughly R200m per year through a 5% “licence fee” taken from the rent paid to landlords.
“These costs ultimately fall on taxpayers for a function that should ordinarily be performed within NSFAS itself,” said Fick.
Outa also found that accommodation providers paid about R33m to register their beds on the portal.
If agents are certifying properties without proper inspection or approving bed numbers that clearly do not reflect reality, then the reliability of the entire accommodation system must be questioned.
— Rudie Heyneke, Outa senior project manager
Outa senior project manager Rudie Heyneke said more money was also deducted from accommodation payments.
“In addition, for eight months during 2025, roughly R230m was withheld from accommodation providers to cover a so-called licence fee linked to the mandatory use of the portal,” said Heyneke.
Despite the billions of rand spent, many students lived in terrible conditions. Outa’s visits to buildings in Durban revealed:
- some buildings had no fire equipment or working lifts;
- reports of structural decay, pests and no running water or electricity;
- security guards at one building alleged that students were “renting out their rooms to prostitutes” and are exposed to “mugging, assaults, drug-related incidents and other criminal threats”.
Outa said some accreditation agents did not properly inspect buildings and sometimes submitted incorrect information to NSFAS.
In some cases, properties were given top grades even though they did not meet the minimum standards set by the department of higher education and training.
One example in the report raised serious concerns. A property listed as having about 200 beds appeared to be an ordinary three or four-bedroom house.
“If agents are certifying properties without proper inspection or approving bed numbers that clearly do not reflect reality, then the reliability of the entire accommodation system must be questioned,” said Heyneke.
Outa also flagged possible conflicts of interest involving companies linked to the accommodation system.
The report states: “One of the directors of Profecia IT (Pty) Ltd, Mr Ebenezer Kwamena Smith, is also a director of two other companies, Adam Fae (Pty) Ltd and Fort Brook (Pty) Ltd.”
Fae was appointed as an accreditation agent while Fort Brook was an accommodation provider.
According to the report, this situation raises a red flag and was overlooked or intentionally ignored by NSFAS.
The investigations also found a massive gap between the number of students NSFAS paid for and the number of beds that were actually checked and approved.
In 2025, NSFAS had 806,382 beneficiaries in total and the scheme paid for 425,053 students to stay in private housing. However, there were only about 250,000 accredited beds available.
This means NSFAS paid for about 247,00 beds that were not accredited by their own agents in 2025 alone.
The report states that from 2023 to 2025, NSFAS paid on average for 100,000 beds more than were actually accredited each year.
It also suggests that “NSFAS paid for 367,582 students to stay in accommodation not accredited by the NSFAS accreditation agents.”
In a statement, NSFAS said it “acknowledges and welcomes” the Outa report and will “carefully review” the findings.
The scheme stated that its current board has worked to “stabilise” the situation by clearing payment backlogs and stopping mass evictions.
NSFAS also said it plans to move towards paying accommodation providers directly instead of relying on solution partners.
“NSFAS is resolute in ensuring that any student, accommodation provider, service provider, or staff member found to have defrauded NSFAS... is held accountable,” said the scheme.
NSFAS said the the Special Investigating Unit (SIU) was already investigating issues linked to student accommodation.
“NSFAS is fully cooperating with the SIU and will continue to support the investigation as required.”
Outa said it has handed its evidence to SIU and the police for investigation.
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