Student Accommodation Timebomb

OUTA’s latest report reveals a critical shortage of NSFAS-accredited student accommodation for 2024, which can largely be ascribed to the fact that the student aid scheme once again appointed inexperienced and understaffed service providers to carry out accreditation services

OUTA completed its investigation into student accommodation tenders at the National Student Financial Aid Scheme (NSFAS), and the findings are cause for grave concern.

NSFAS announced that it needs 397 000 beds for NSFAS-funded students in 2024, but by 4 October 2023 the scheme reported to the Higher Education Portfolio Committee that there were only 25 803 (or 6.5%) of the required beds accredited. “It is highly unlikely that there will be enough beds accredited by the time universities and TVET colleges start in January 2024. This means that thousands of students will kick off the year without accommodation yet again,” says Rudie Heyneke, Investigations Manager of OUTA.

At the start of the 2023 academic year, a similar crisis led to widespread student protests, as thousands of students were left stranded after NSFAS capped student accommodation at R45 000 per student per year. Students resorted to sleeping in public places, libraries, hallways, bathrooms or in makeshift accommodation, also leading to many going to classes on empty stomachs as they had nowhere to cook any meals.

Apart from lowering the accommodation allowance by R15 000 (from R60 000 in 2022), private accommodation providers and institutions who have their own accommodation must now register their beds on the NSFAS student accommodation portal at a cost of between R100 and R200 per bed. Only after payment will it be inspected to see if it complies with the minimum standards and norms as set by the Department of Higher Education. Once the accommodation is approved, a certificate of compliance will be issued, and only after that accommodation – which NSFAS would pay – could be made available for students. NSFAS then deducts a further 5% from the rental amount as a “licence fee” for the use of the platform.

Minimum requirements for NSFAS accredited accommodation were gazetted on 29 September 2015 (see here), and include specifications around location as well as the design of the building.

Requirements include but are not limited to the following:

Rooms for single students must be more than 8 square metres in size, while a double room should be bigger than 14 square meters.

In addition, students’ living quarters must have:

• One sink for every four people;
• One shower stall for every seven people;
• One toilet for every five people;
• Personal space in the restrooms;
• Enough air circulation in the living quarters;
• Access to the Internet (wireless or fibre optic cable); and
• Laundry facilities or service.

Finding suitable accommodation remains a significant concern for NSFAS beneficiaries, and many students have already expressed concerns about the availability for 2024.

It is OUTA’s view that the current developing crisis can be attributed directly to NSFAS, who appointed inexperienced and understaffed service providers to inspect and accredit student accommodation.

According to NSFAS’s own requirements, service providers responsible for accreditation must have an occupational health and safety inspector, building inspector, engineer and an electrician in their employ to carry out inspections. Yet, the majority of the 39 service providers NSFAS appointed (see report), do not meet any of these requirements, lacking the required skills and experience. They range from debt collectors and an individual who is currently charged with corruption and money laundering, to government employees, politically exposed persons and student accommodation developers who are now also acting as accommodation accreditors. Some of the companies were registered only after the tender was advertised.

These are just some of the findings in OUTA’s report, which can be read here.

Heyneke explains that the current crisis was exacerbated by January’s announcement that accommodation allowances will be capped at R45 000. The Minister of Higher Education, Blade Nzimande, pleaded with the private sector some years ago to develop students’ accommodation to address the severe shortage in suitable, affordable accommodation close to campuses. Developers had to comply with the minimum standards and norms as set out by the department.

But with the cap on student accommodation, developers could simply not afford to rent out their accommodation to NSFAS students, since the R45 000 per year would not cover their costs. Increased interest rates on loans, inflation and ever-increasing municipal bills as well as running costs resulted in huge losses for some of these developers. “One developer explained to OUTA that the department asked them to develop 5-star accommodation, but it is now only willing to pay 3-star prices,” says Heyneke.

“Like in the case of students who did not have a choice other than to register for the NSFAS bank card to get their allowances, accommodation providers don’t have a choice: they have to use the NSFAS accommodation platform if they want to make their accommodation available for NSFAS students.”

“We will submit our report to the Department of Higher Education, the Higher Education Portfolio Committee, the umbrella body for universities (USAf), and all relevant stakeholders to assist them in finding a solution.”

The Werksmans investigation into the conduct of the former CEO of NSFAS and the evaluation of the direct payment of allowances found that during the evaluation phase of the tender, the CEO Andile Nongogo (who has since been dismissed) was present when bidders presented their solutions to the bid evaluation committee (BEC). Werksmans also found that the CFO chaired the BEC, which is highly irregular. The same thing happened with the evaluation of the student accommodation portal tender.

OUTA will therefore also share its report with the Special Investigating Unit (SIU) and the Auditor-General to enable them to investigate the evaluation of the NSFAS tenders related to student accommodation. “Every person who assisted in creating this crisis should be held to account. We cannot allow students to be exploited and treated like this just because they are dependent on a badly run government institution,” Heyneke says. “We trust that the NSFAS board will act with urgency to prevent the crisis from escalating.”

Last week NSFAS reported to parliament that, due to budget cuts announced during the MTBPS, there will be less money available in 2024 and 2025 for students reliant on the scheme for tertiary education and training.

“We are very concerned that there will be even less money for the financially disadvantaged students to study in 2024. It is therefore of utmost importance that the available money should be used responsibly and to students’ advantage. The youth is the future of our country, and we have a collective responsibility to ensure that they get the opportunities they deserve,” says Heyneke.

Heyneke remarks that 2023 was a particularly challenging year for NSFAS students. “They had to deal with a lot of uncertainty and anxiety due to the late payment of allowances caused by NSFAS’s decision to change service providers in June. Some students have still not received all the money due to them. Many were kicked out of accommodation because landlords never received payment, while many students wrote year-end exams with little or no food because of the non-payment of allowances. OUTA therefore decided to hold back on our accommodation report. We didn’t want to cause students who are already struggling further stress while preparing for exams.”

OUTA calls on the minister, NSFAS board, universities, TVET colleges and accommodation providers to urgently work on a solution before the start of the 2024 academic year to prevent the same or even bigger chaos next year. “Our country can ill afford more chaos, and poor students don’t deserve to be treated like they don’t matter,” says Heyneke.