As a result of the world economic downturn in the 1980's, fewer students enrolled in the School. As the income of the School depended mainly on the student's school fees, the School faced severe financial problems. The Board of Directors appealed to all alumni associations for them to contribute their works to raise funds for the School. The exhibition was held on 8th February 1974 and raised a total of $120,000 for the School. At the same time a few graduates, who completed their overseas training, came back to teach at the School. These returning graduates helped establish the applied arts course and attracted many students to the commercial design courses. In 1976, the School also started painting classes for children. In June 1979, at the 38th batch of students' graduation ceremony, the Guest-of-Honour, who was the then Parliament Secretary for Culture, Dr Ow Chin Hock, urged Nanyang Fine Arts College to undertake critical reformation and restructure its Board of Directors, restudy its administration and curriculum. This prompted a new Board of Directors to be formed with Mr Tang Liang Hong as the Chairman and Mr Wang Seng Ze as the Vice-Chairman. Mr Wu Tsung Kan was appointed the Principal and Mr Lim Yew Kuan its Vice-Principal. Mr Wu formed a Consultative Committee for Professional Fine Arts to restructure the School's curriculum and laid down the outline plans for development. He also invited several local artists to be consultants to the School to help restructure its curriculum. He invited many well known artists to be guest lecturers, established an art gallery, acquired audio and visual equipment, and established a core research group and a Resource Center - to collect local artists information, art catalogues and slides so as to facilitate the students' research in Southeast Asian arts with special emphasis on Singapore arts. In 1982, the Nanyang Fine Arts College was upgraded to be the Nanyang Academy of Fine Arts, NAFA in short. With the support of the Hokkien Clan Association, NAFA acquired another premises at 107A Sophia Road which was named the San San Campus. In 1984, when the administration office moved to the San San Campus, NAFA had established the Music and Dance Department. During the same year, the Secondary School Art Teachers in-Service class was converted to the Department of Arts education. In August 1985, NAFA and the Malaysian Institute of Arts co-organised an Asian Pacific Conference on Arts Education (ASPACE'85). A working committee headed by Mr Wu Tsung Kan, the principal, hosted the event to promote international cultural exchange and academic discussion. The participants, most of whom were representatives of art academies in the Asia Pacific region, hailed from various countries such as Japan, Australia, South Korea, the Philippines, USA and Italy. The fields of art covered included dance, music, painting and aesthetics. In 1986, the Fashion Design Department was set up. On 8th April 1988, NAFA celebrated its 50th golden anniversary at the Mandarin Hotel with a 1000-guest grand dinner, an art exhibition and a fashion show.

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