Nsfas said private housing associations are often formed ad hoc, without any framework and legislation”.
The National Student Financial Aid Scheme (Nsfas) has warned Parliament that it is increasingly being “held to ransom” by private student accommodation providers.
This comes amid growing pressure, weak regulation and rising costs.
The challenges were highlighted in a presentation to the Portfolio Committee on Higher Education earlier this week. Nsfas outlined key risks that threaten the sustainability of student housing during this meeting.
‘Ad hoc’ providers and rising pressure
Nsfas said private housing associations are often formed “ad hoc, without any framework and legislation”. As a result, they “hold the student accommodation process to ransom”.
The scheme highlighted intensifying competition among providers. In particular, “oversupply in certain areas of the country leads to contestation and grabbing of students between accommodation providers”.
At the same time, financial pressures are mounting. Nsfas reported “pressure for annual increments almost as severe as the pressure from students on increases”, compounding already strained budgets.
Accommodation costs are also escalating rapidly, with expenditure growing “14% year on year”. This is raising concerns about affordability and its “impact on learning”.
System challenges at institutions
Nsfas said institutions face “challenges in managing accommodation”. Meanwhile, ungraded university residences are “often leading to overclaims against the backdrop of declining maintenance budgets”.
The scheme warned that a “long-term strategic decision” is needed on whether responsibility for private accommodation should sit with Nsfas or institutions. In addition, it questioned how capacity can be strengthened.
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New accommodation process outlined
To tighten controls, Nsfas detailed updated procedures for institutions participating in its accommodation project.
The scheme will deploy officials to campuses to manage placements. They will work alongside financial aid officers to assist students in securing either campus or private housing.
“Only once both registration has been confirmed, and a lease agreement signed, will private accommodation providers be eligible for payment,” Nsfas said.
It added that a monthly disbursement schedule will guide payments. The scheme also warned that providers housing students without confirmed funding or signed leases “will do so at their own risk”.
Strict payment requirements
Nsfas emphasised that payments will only be processed if strict conditions are met.
These include confirmed student funding eligibility, accurate institutional registration data submitted before deadlines, and signed lease agreements via the accommodation portal.
The scheme said these measures are aimed at improving accountability and preventing irregular claims.
This is important as it grapples with mounting pressures in the student housing sector.
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