SIU warns parents who supplied fake NSFAS details may face criminal charges

The Special Investigating Unit (SIU) has warned that parents who allowed students to use their personal details to secure funding from the National Student Financial Aid Scheme (NSFAS) could face criminal charges. The SIU says the scheme is owed R5.1 billion and that many students who were found ineligible may be asked to sign admissions of debt to repay funds.

How the fraud was uncovered

The SIU found that relatives had illegally allowed students to use their personal details to pretend they were biological parents or legal guardians, enabling ineligible students to receive NSFAS funding. The unit reported that 40,440 ineligible students had received funding after fabricated parental details were used to bypass eligibility requirements.

SIU report and parliamentary briefing

The findings were included in a report tabled to the portfolio committee on higher education and training. A delegation from the SIU, led by acting head Leonard Lekgetho, appeared before the committee this week to present the probe results.

Students, parents and repayments

The SIU said parents who provided false information could face fraud charges. The unit also noted the state faces a dilemma about charging students because criminal records could harm their future careers. As an alternative, the SIU said students could be required to sign admissions of debt and repay the total amount owed to NSFAS.

Investigations at institutions

As part of its probe into the 76 affected institutions, the SIU reported that 61 institutions were visited by investigators. The unit said it had interviewed 24 universities and 37 technical and vocational education and training (TVET) colleges, with 15 institutions still awaiting SIU scrutiny.

Separately, the SIU said it had visited 58 institutions in all provinces and that most were aware of credit balances due to NSFAS. The SIU instructed institutions to pay a portion of outstanding debt back to NSFAS while financial reconciliations and student dispute resolutions continued.

Institutions’ responses and concerns

The SIU reported that some institutions had begun repaying money, while others used interest from amounts owing to NSFAS for daily operations. Several institutions refused to repay credit balances until NSFAS settled debts it owes them under existing agreements; some claimed NSFAS owes them funds for the 2023 academic year.

Control weaknesses and SIU recommendations

The SIU said NSFAS failed to design and implement adequate financial management controls, including an annual reconciliation between funds disbursed to institutions and funds allocated to students. This control weakness led to overpayments and underpayments to institutions over the past nine years, the report said.

To address these weaknesses, the SIU recommended an in-depth analysis of NSFAS’s internal audit control environment and that reconciliations between NSFAS and institutions be performed twice per year, not only at year end, to prevent misuse of funds that were not distributed to students.

Recovery process under way

The SIU said the process to recover outstanding balances from universities and TVET colleges is under way and will include a close-out process that must be completed and signed off before final repayment agreements are enforced.