NSFAS is established under the National Student Financial Aid Scheme Act 56 of 1999 to manage a bursary scheme for financially deserving students. NSFAS issues annual guidelines in consultation with the Minister determining eligibility criteria for funding under section 4(b) of the Act. In 2021, facing severe budget shortfalls exacerbated by the COVID-19 pandemic and economic deterioration, NSFAS amended its 2020 guidelines to exclude funding for second or postgraduate qualifications, including the postgraduate LLB degree. Previously, under the 2020 guidelines, the LLB degree (offered as a two-year or three-year postgraduate qualification at Wits University) was an exception to the general exclusion of postgraduate funding. Three students at Wits University (Ms Moloi, Ms Makhaza, and Mr Motaung) who were enrolled or seeking to enroll in the postgraduate LLB challenged the 2021 amendments. Ms Moloi was entering the two-year LLB programme after completing her BA(Law); Mr Motaung was in the first year of the three-year LLB; Ms Makhaza was in the second year and had been receiving NSFAS funding until the 2021 changes. The students challenged the decision to defund the postgraduate LLB on the basis it was administrative action subject to PAJA, procedurally unfair, irrational, and violated their legitimate expectation of funding.
Leave to appeal granted with no order as to costs. Appeal upheld with no order as to costs. The high court order reviewing and setting aside the 2021 NSFAS guidelines was set aside and replaced with an order dismissing the application with no order as to costs.
The determination of eligibility criteria for student funding under section 4(b) of the National Student Financial Aid Scheme Act 56 of 1999, involving consultation between NSFAS and the Minister, consideration of budgetary constraints with National Treasury, and Cabinet approval, constitutes policy formulation and executive action rather than administrative action subject to PAJA. Executive decisions must be rationally connected to the purpose for which the power is conferred, assessed objectively. The prioritization of funding for first undergraduate qualifications over second or postgraduate qualifications, in circumstances of severe budgetary constraint, constitutes a rational policy choice aimed at maximizing access to higher education for first-time entry students from poor and working-class backgrounds. Procedural fairness requirements apply to executive action but may be satisfied through consultation with representative bodies (such as student unions and university associations) rather than individual consultation with all potentially affected persons, particularly where urgent circumstances make broader consultation impractical. The limitation of the constitutional right to further education under section 29(1)(b) through funding prioritization must be assessed for reasonableness and proportionality, but courts will defer to executive policy choices in resource allocation provided they are rationally justified and the limitation is proportionate to the legitimate aim pursued.
The Court emphasized that its finding on procedural fairness was confined to the particular circumstances of this case, including the urgent timeframe and budgetary crisis. The Court noted, without deciding definitively, that the high court's order might have ongoing effects beyond the 2021 guidelines, creating potential uncertainty - though the Court found it in the interests of justice to determine the appeal regardless of potential mootness. The Court observed that while substantive legitimate expectation has been recognized in limited instances in South African law, courts should be cautious about such relief to avoid unduly fettering the discretion of state authorities, particularly in matters involving policy formulation and resource allocation. The Court distinguished procedural irrationality from procedural fairness under PAJA, noting that procedural irrationality concerns whether there is a rational connection between the process followed and the purpose to be achieved, whereas procedural fairness concerns affording affected parties opportunity to be heard - though acknowledged this distinction may not always be determinative. The Court noted that although the students in this particular case were asserting constitutional rights, the individual respondents did not in fact meet the eligibility criteria even under the previous guidelines, though this was not the basis for the final determination.
This case clarifies the distinction between administrative action (subject to PAJA) and executive action (subject to legality review) in South African administrative law. It establishes that policy formulation by statutory bodies like NSFAS, particularly where it involves budgetary considerations, consultation with multiple government departments, and Cabinet approval, constitutes executive action rather than administrative implementation. The judgment affirms that procedural fairness requirements apply to executive action but may be satisfied through consultation with representative bodies rather than individual notice and comment procedures, particularly in urgent circumstances. It demonstrates judicial deference to executive policy choices in resource allocation, applying a rationality rather than reasonableness standard to such decisions, while acknowledging that limitations on constitutional rights (like the right to further education under section 29) require separate reasonableness and proportionality analysis. The case is significant for education law, establishing limits on legitimate expectation claims in the context of annually updated funding guidelines and recognizing the executive's broad discretion to prioritize first-time entry students over postgraduate qualifications in conditions of fiscal constraint.
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