Grants in South Africa offer essential financial support across sectors such as education, welfare, and small business. Whether issued through NSFAS, SASSA, or private and public institutions, these funds are usually non-repayable. However, repayment may be required in certain situations, such as misuse of funds, failure to meet conditions, or changes in eligibility.
Key Takeaways
- Grants Generally Do Not Need Repayment: Most grants in South Africa, including those from NSFAS or SASSA, do not require repayment if the recipient follows all conditions, such as staying enrolled, using funds correctly, and meeting performance standards.
- You May Need To Repay If Terms Are Broken: Repayment may be required if the grant is misused, if academic or project obligations are not met, or if the recipient fails to report changes in financial or personal circumstances.
- Most Grants Are Taxable Unless Exempt: SARS requires that grants be included in gross income unless they are specifically excluded by law. Even tax-exempt grants can affect other allowable deductions, and non-cash grants must be declared at market value.
About Arcadia Finance
Get a loan quickly and securely with Arcadia Finance. There are no application fees, and you can choose from 10 trusted lenders registered with South Africa’s National Credit Regulator. Enjoy a smooth, transparent process designed to meet your financial needs.
What Is A Grant?
A grant refers to a form of financial assistance awarded to a student to help cover the costs associated with attending university. These funds are most commonly issued by government bodies, although private institutions may also contribute in certain cases. In South Africa, the National Student Financial Aid Scheme (NSFAS) is the main provider of student financial support. This scheme typically covers tuition fees, accommodation costs, as well as allowances for learning materials and meals.
In addition to NSFAS, other government departments may issue grants that are specifically linked to certain study disciplines or public sector needs. Private companies may also fund grants as part of their broader corporate social responsibility initiatives aimed at addressing educational inequality.
Grants generally do not require repayment, as long as the student continues to meet the necessary terms. Failure to maintain satisfactory academic performance or withdrawing from the study programme without a legitimate reason may result in the grant being converted into a repayable amount.
Types of Grants in South Africa
South African grants span social welfare, education, and occasionally business support. Here is a clear breakdown for South African customers:
Social Welfare Grants (Administered by SASSA)
These grants are available to eligible citizens, permanent residents, or refugees facing poverty or hardship:
- Older Person’s Grant: For individuals aged 60 or older. Means-tested apart from state pension provision
- Disability Grant: Available to adults with a physical or mental disability of six months or longer. Applicants undergo medical assessment and means-testing
- Child Support Grant: Paid to primary caregivers of children under 18, subject to income thresholds. One of the most widely accessed grants
- Foster Child Grant: Provided for legally fostered children under 18, without means-testing
- Care Dependency Grant: For caregivers of children with severe disabilities, subject to means-testing
- Grant‑in‑Aid: An extra monthly R560 for existing grant recipients who cannot self-care and live in community settings
- War Veteran’s Grant: For veterans of the Second World War or Korean War aged 60 or older
- Social Relief of Distress (SRD) Grant: A temporary R350 monthly payment for unemployed adults not receiving other grants or UIF
Educational Grants and Bursaries
Managed primarily by NSFAS (National Student Financial Aid Scheme), these grants target financially needy students at public universities or TVET colleges:
- NSFAS full bursary: Covers tuition, accommodation, meals, learning materials, and travel for eligible students, with household income capped at R350 000 per year (up to R600 000 for students with disabilities)
- Sector‑specific bursaries: Includes the Funza Lushaka bursary for teacher training, plus SETA-supported funding
Before 2018, NSFAS support was structured as a loan; now most awarded funds are non‑repayable bursaries, though pre‑2018 debts remain repayable.
Business Grants
Though not centrally managed like SASSA or NSFAS, business grants are occasionally offered by government departments (DTIC, SPII, CIS, etc.) or state agencies. Unlike social or educational grants, these often require co‑funding, performance reporting, and may demand partial repayment if criteria are not met. These are less common and vary depending on sector and funding cycle.
Conditions That Can Make a Grant Repayable
| Condition | Description |
|---|---|
| Misuse of Funds | If the grant money is used for purposes other than those approved, such as spending an education grant on personal luxuries or using a business grant outside of operational needs, repayment may be required. Funders typically set clear conditions on how the money should be spent. |
| Failure to Meet Grant Conditions | Grants often come with conditions that must be met. For student grants, this may include maintaining satisfactory academic progress. For business grants, it might involve meeting job creation targets or submitting regular progress reports. If these obligations are not met, the funder may request that the grant be paid back. |
| Withdrawal from Programme or Course | If a recipient withdraws from their studies or project without a valid reason or before completion, they may be required to repay part or all of the grant. This is especially common with education-related funding. |
| Overpayment or Administrative Error | In some cases, a grant provider may accidentally pay out more than the recipient is entitled to. If this happens, the excess amount must be returned. This applies to social grants as well as academic and business funding. |
| Receiving Multiple Grants for the Same Purpose | You cannot receive more than one grant for the same need. For instance, receiving two separate grants for tuition fees from different sources could result in one of them being repayable once discovered. |
| Change in Financial or Personal Circumstances | If your situation changes and you no longer meet the eligibility criteria for the grant, but you fail to report this to the provider, you may be expected to return the funds. Examples include an increase in household income or receiving alternative funding. |
| Breach of Reporting Requirements | Grant recipients are often required to provide regular updates or documentation showing how the money is being used. Failing to do so may breach the agreement and lead to a repayment obligation. |
How to Ensure You Do Not Have to Repay a Grant
Understand the Grant Terms in Full
Before accepting any grant, read all the terms and conditions carefully. Make sure you meet the eligibility criteria and fully understand the obligations attached to the funding. This may include maintaining academic performance, submitting reports, or completing a specific course of study.
Use the Funds for Approved Purposes Only
Grant money must only be spent on what it was intended for. For example, an education grant may be restricted to tuition, accommodation, books, or meals. Using the funds for unrelated expenses such as entertainment or travel could result in the provider demanding repayment.
Meet All Academic or Performance Requirements
If the grant is related to education or a specific project, you must meet the required standards. This could include passing your modules, completing assignments, or reaching project milestones. Failing to meet these expectations may lead to the funding being withdrawn or converted into debt.
Inform the Grant Provider of Any Changes
If your personal or financial situation changes, such as switching courses, leaving your studies, or your income increasing, you must notify the grant provider immediately. Keeping this information to yourself can lead to disqualification and a demand for repayment.
Submit All Required Documentation on Time
Many grants require recipients to submit progress reports, financial statements, or proof of registration. These documents must be submitted within the timeframes specified. Missing deadlines or providing incomplete information may place your grant at risk.
Do Not Apply for More Than One Grant for the Same Need
Receiving multiple grants that serve the same purpose, such as two grants for tuition fees, is not allowed. If you are found to be receiving overlapping financial support, one or both providers may request repayment.
Keep Proper Records and Receipts
Maintain clear records of how the grant money was spent. Keep invoices, receipts, and any correspondence with the grant provider. If there is ever a dispute or audit, these documents can help show that the funds were used appropriately.
Monitor Announcements and Policy Changes
Grant providers may update their rules or eligibility criteria. It is your responsibility to stay informed by regularly checking official websites or reading notices sent to you. Ignoring such updates may put your funding at risk without you realising it.
Tax Treatment Of Grants
The South African Revenue Service (SARS) has issued updated guidance explaining how government grants should be handled for tax purposes. According to this guidance, all government grants must be declared as part of gross income, irrespective of whether the grant is capital in nature or not.
However, some grants may be excluded from tax, depending on their classification under section 12P or section 10 of the Income Tax Act. This exemption typically depends on how the grant is listed or formally approved by the relevant authorities.
There are also specific tax rules that apply to certain types of grants. For example, grants awarded as part of Public-Private Partnership (PPP) projects, or grants that are provided in non-cash form such as goods or infrastructure, may be treated differently under SARS regulations.
Matters To Take Note Of
- Most Grants Are Taxable Unless Specifically Excluded: Government grants are generally taxable unless listed in the Eleventh Schedule or approved by the Minister in the Government Gazette. This applies even if the grant is used for capital or long-term projects.
- Tax-Free Grants May Still Limit Other Deductions: Grants that are not taxed can still reduce other tax deductions or allowances, particularly under sections 11 or 12C. This prevents taxpayers from receiving overlapping tax benefits.
- Recoupment Rules Can Apply On Disposal: If an asset funded by a grant is later sold or discarded, SARS may apply recoupment under section 8(4)(a) or treat it as a capital gain.
- Non-Cash Grants Must Still Be Declared: Grants given in goods or services, such as equipment or infrastructure, must be declared at market value unless specifically exempt.
Conclusion
Grants in South Africa offer essential financial support for education, welfare, and, in some cases, business development. While most grants do not require repayment, recipients must comply with the specific conditions outlined by the provider. Misuse of funds, failure to meet performance requirements, or receiving overlapping grants can lead to repayment obligations. It is also necessary to understand the tax implications of receiving a grant, as many are taxable unless clearly exempt. To avoid complications, applicants should read the grant terms carefully, use the funds as intended, keep proper records, and report any changes in their circumstances.
Frequently Asked Questions
Do I have to repay an NSFAS grant?
No, if you received funding from NSFAS after 2018 and meet all the conditions, such as academic progress and course completion, it is considered a bursary and does not need to be repaid. Pre-2018 NSFAS loans may still be repayable.
Can a SASSA grant become repayable?
SASSA grants are not repayable under normal conditions. However, if you were paid more than you were entitled to or failed to report a change in income, SASSA may recover the overpaid amount.
What happens if I drop out of my studies after receiving a grant?
If you withdraw without a valid reason or fail to complete your studies, the grant provider may ask you to repay part or all of the funds, especially in the case of educational bursaries.
Are business grants always non-repayable?
Not always. Some business grants may require partial repayment if performance targets are not met or if the funds are not used for the intended purpose. These grants often come with strict conditions.
Are grants from government departments taxable?
Yes, most grants are taxable unless specifically exempt under the Income Tax Act. Even tax-free grants may reduce other allowable deductions, and any non-cash grants must be reported at their market value.
Fast, uncomplicated, and trustworthy loan comparisons
At Arcadia Finance, you can compare loan offers from multiple lenders with no obligation and free of charge. Get a clear overview of your options and choose the best deal for you.
Fill out our form today to easily compare interest rates from 19 banks and find the right loan for you.
