Sizwe Nxazana, the highly regarded chairperson of the National Students' Financial Aid Scheme (NSFAS), has resigned.
He confirmed to News24 that he informed minister of higher education Naledi Pandor of his decision on Monday.
"It is time to move on and make way for new leadership and to see how government will take this forward," Nxasana said in an interview.
NSFAS came under fire recently after Pandor instructed the institution to halt funding for 2019 students because a backlog in disbursing aid for 2017 and 2018 had not been cleared. NSFAS has an annual budget of R30bn.
In a statement, Nxasana cites the "extreme strain" on the NSFAS payments system after then-president Jacob Zuma's announcement of the extention of free higher education in December as a reason for the institution's strife.
Zuma made the announcement without prior warning or consultation with actors in the higher education sector. He also seemed to ignore the findings of a commission of inquiry into higher education initiated after the #FeesMustFall protests.
Nxasana, a former CEO of FirstRand, denied recent reports which said NSFAS was in crisis and said the organisation was stable and functioning.
"But yes, there are challenges facing NSFAS. The environment changed after the announcement by the then-president (Jacob Zuma) last year about the extention of free higher education and we had to change our systems and processes to accommodate the new situation. Government will now have to decide how to manage it going forward," he said.
He said government has indicated it will now review the structure and organisation of NSFAS and that it is "only right" that he make way so that Pandor's department make the changes it sees fit.
City Press and News24 earlier reported about a series of letters exchanged between the NSFAS board and the ministry about incomplete information on registration and funding backlogs.
The National Health and Allied Workers' Union (Nehawu) also joined the fray, demanding that both Nxasana and CEO Steven Zwane be fired.
The union was aggrieved with appointments made by Zwane and said that Nxasana ignored issues it raised with him.
"There has been an increase in students requiring financial assistance since the announcement (by Zuma) and we had to adapt. This we had to do whilst still dealing with legacy issues at the institution. We are now faced with a challenging new environment. A lot more students apply than there are available places at universities and other tertiary institutions. The capacity is simply not enough," he said.
Nxasana, a chartered accountant, was CEO of banking holding company FirstRand between 2006 and 2015, before being appointed to put NSFAS back on even keel by then-minister of higher education Blade Nzimande in 2015.
He said he will remain involved in supporting education initiatives through the Sifiso Learning Group and Future Nation Schools.
He said in a statement, "While the last few years have been extremely challenging, I am grateful for the opportunity to have been able to immerse myself in education and contribute to finding sustainable solutions for the higher education sector. I am passionate about helping our youth access education and want to recognise the many thousands of students whose success inspire all of us and give us hope for the future.
"Since December 2016, the NSFAS mandate and funding obligations increased exponentially, placing extreme strain on the organisation's systems and processes. I would like to recognise the many patriotic and committed South Africans in government, business and academia who have contributed their expertise and resources to try and make quality education accessible. I will continue making a contribution in my different roles and capacities to support less privileged young South Africans acquire the knowledge and skills to allow them to participate meaningfully in the economy and our nation's life."