In the heart of South Africa's higher education landscape, a shocking allegation has emerged involving an intern with the National Student Financial Aid Scheme (NSFAS), the government body responsible for funding students from low-income families at public universities and Technical and Vocational Education and Training (TVET) colleges. Abongile Nghona, a participant in NSFAS's graduate internship program stationed at False Bay TVET College, stands accused of moonlighting as a loan shark, preying on cash-strapped students by charging exorbitant interest rates of up to 45% on short-term loans. This scandal, which surfaced publicly in late April 2026, underscores the dire financial vulnerabilities faced by NSFAS beneficiaries amid persistent delays in allowance disbursements.

The story broke through WhatsApp messages circulating in student residence groups at Cape Peninsula University of Technology (CPUT), where Nghona allegedly advertised loans with brazen transparency: "Evening guys, loan is available, 45% interest. You can DM." Desperate students, waiting weeks or months for their monthly allowances of around R1,740, turned to these predatory offers for basics like food, transport, and data. One affected CPUT student borrowed as little as R100, only to repay R140—a 40% markup—escalating into a debt trap that spiraled her mental health into crisis, including suicide attempts and hospitalization.

Exploiting Trust: How the Intern Operated Within Higher Education Circles

Nghona's access to student data and residence networks via her NSFAS role at False Bay College positioned her ideally to target vulnerable first-year and continuing students at nearby CPUT campuses. Borrowers submitted sensitive documents—proof of residence, registration, student cards, and IDs—to secure loans, often using laptops or phones as collateral. Repayment demands turned aggressive, with threats to seize belongings or involve parents, trapping students in cycles of dependency.

A father's account reveals the human toll: discovering his daughter's R850 debt plus 45% interest after she was hospitalized for self-harm. "Borrowers are subjected to unfair repayment terms, including intimidation or coercion," he stated, highlighting withheld IDs and NSFAS funds as leverage. Nghona denied charging interest, claiming she lent only to known students on behalf of her mother, but screenshots contradict this, showing explicit 45% ads and threats like "pay up or lose your laptop—R5,000 owed."

CPUT reported no prior formal complaints but swiftly launched a probe upon media inquiry, urging victims to come forward. False Bay College and NSFAS confirmed ongoing investigations, with NSFAS spokesperson Ishmael Mnisi emphasizing a "zero-tolerance policy towards fraud, corruption, and exploitation."

NSFAS: Lifeline or Liability for South Africa's Universities and TVETs?

Established post-apartheid to democratize access, NSFAS funds over 1 million students annually across 26 public universities and 50 TVET colleges—626,935 first-time entrants and 427,144 continuing students for 2026, backed by a R55.4 billion budget. It covers tuition, accommodation (up to R50,000/year), living allowances (R15,000), books (R5,000), and transport, targeting households earning below R350,000.

Yet, dependency is high: 80% of funded students are first-years from disadvantaged backgrounds, with NSFAS comprising 70-90% of institutional revenue at under-resourced TVETs like False Bay and Lephalale. Dropout rates hover at 63% for NSFAS cohorts over five years, exacerbated by funding gaps—low-income families account for 70% of dropouts, per recent studies.

Chronic Delays Fueling Desperation in Higher Education

NSFAS payment delays—often 3 months into the term—leave students destitute, unable to afford meals or res fees. In 2026, upfront tuition advances to TVETs (20% on Jan 31) and R6.3 billion disbursed by March highlight efforts, but protests erupted at Durban University of Technology (DUT), CPUT, and University of the Western Cape over late allowances. A 2024 study linked these delays to heightened stress, anxiety, and 40% dropout risk for vulnerable students.

At CPUT, the epicenter, students in Kwa Langa and Cape Suites residences borrowed amid waits, mirroring national trends where 132,000 applications were rejected and 200,000+ appealed. "Like many NSFAS beneficiaries, I was still waiting for my allowance... I got deeper into debt," one victim recounted.

Photo by Giulia May on Unsplash

Broadening Fraud Shadows Over NSFAS and Campuses

This intern case is symptomatic of systemic rot: 822 payments to deceased students in 2024/25, R5 billion to undeserving recipients, and 11 arrests at Lephalale TVET for diverting 2017 funds via ghost students. Hawks probes uncovered clerks and seniors siphoning bursaries, compromising TVET integrity.

• Ghost beds: OUTA flagged accommodation mafia inflating claims, risking billions.
• TVET theft: Lephalale case denies spots to deserving youth.
• Protests: Violent clashes at DUT/CPUT over delays, damaging facilities per HEFMA.

SIU recovered R688 million, but fraud erodes trust, with USAf warning of enrollment cliffs.

University and College Responses to the Crisis

CPUT's proactive investigation contrasts broader inertia. Universities like University of Johannesburg and Stellenbosch withhold results for debts, while TVETs like Northlink repaid R33 million via SIU. Student unions (SAUS) decry "incompetence riddled with corruption," demanding audits.

Minister Buti Manamela vows readiness for 2026, with NSFAS-NGB partnerships on gambling awareness amid desperation-driven risks.

Legal Ramifications: Is 45% Interest Illegal Moneylending?

South Africa's National Credit Act caps rates at prime + 20% (~27% max), rendering 45% usurious and criminal. Unregistered lenders face fines/jail; withholding collateral/ID breaches coercion laws. Victims can report to National Credit Regulator; father's push highlights parental exclusion risks.

Stakeholder Perspectives: From Despair to Demands for Reform

SAUS: "NSFAS battlefield of incompetence." OUTA: Urgent accommodation overhaul. Experts note 29% funds to over-threshold households, urging verification tech. Universities push NSFAS portal uploads for timely lists.

"Delays compound pressures for disadvantaged students," per 2024 research, risking equity goals.

Photo by Taiki Ishikawa on Unsplash

Pathways Forward: Solutions for Sustainable Student Funding

• Digital verification to end ghost payments.
• Missing middle loans (R8.8B available, low uptake at 26k apps).
• Upfront TVET advances, real-time dashboards.
• Anti-fraud: NSFAS speakup@nsfas.org.za hotline.
• Campus financial literacy programs.

Minister Manamela's 2026 readiness includes ARISE values (Accountability, Respect, etc.), aiming 1M funded without exploitation.

Outlook: Safeguarding Higher Education Access Amid Challenges

As 2026 unfolds, NSFAS probes like Nghona's could restore faith, but sustained reforms are vital. With 70% low-income dropouts tied to funding woes, prioritizing timely aid ensures SA's universities and TVETs fulfill transformation mandates. Students: report exploitation; institutions: bolster support. Higher education's future hinges on bridging desperation to opportunity.

For career paths resilient to such volatility, explore roles in higher ed administration or counseling via trusted platforms.