Minister Guards NSFAS Accommodation Price Cap

Current changes to NSFAS, include the announcement of a price cap for student accommodation providers. This change has however been heavily criticized for a number of reasons.

As part of a series of notable changes to the National Student Financial Aid Scheme, (NSFAS) the Department of Higher Education has introduced an R45,000 price cap on student accommodation. However, the department’s decision has not been well received by government officials.

During a recent parliamentary question and answer session Member of Parliament, Naledi Chirwa, wanted Higher Education Minister, Blade Nzimande, to clarify the basis on which the price cap has been introduced.

According to Chirwa, the price cap does not take into account the existing income disparities between beneficiaries of bursary schemes, particularly those based in different parts of the country.

In response, Nzimande stated that the department used a recent study titled “Market Assessment: The Student Housing Landscape in South Africa” by the World Bank to estimate the NSFAS cap of R45 000.

The Minister added that based on the assessment, the student accommodation market in South Africa is categorized across three market segments, namely, the first, second, and third market segments.

The first market segment, and lowest-income bracket, is the affordable and NSFAS student. accommodation market.

The mid-student housing market makes up the second market group. This market caters to middle-class students with monthly affordability ranging from R3,000 to R4,500. Such student housing is frequently occupied by students who “top-up” their NSFAS housing allowances and typically offers larger bedrooms.

This market segment also includes auxiliary amenities and services like student support services, entertainment areas, and other social amenities compared to the affordable and NSFAS market.

The last market segment is categorized as the premium student housing market and is usually integrated into the development of purpose-built housing for students. These accommodations are promoted as premium packages that include more space, a private bathroom and kitchen, and higher-quality finishes than standard accommodations.

The use of student services and other facilities that might be included in the room rate is also possible a inclusion in these premium packages. Upper-end student accommodation is priced between R5,000 and R8,000 per month, but it can also increase to over R14,000 in some upmarket areas and developments.

The Minister further stated that there is a procedure through NSFAS to dissect the cost structure of different student housing segments to comprehend what the rental cost includes.

Nzimande added that this will make it easier for the government to discuss and agree to pay for the expenses of NSFAS-funded students with landlords and other institutions. The process will prevent instances of institutions receiving multiple grants from the Department.

He further stated that, for students who are receiving financial aid from NSFAS, institutions are asked to provide housing that is within the price cap.

Additionally, NSFAS will talk to lodging companies about hosting NSFAS-funded students while staying within the R45,000 limit.

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