Student loans… Finance Minister promises 75% interest reduction if loans cleared by August 31

Jul 30, 2016 News

as new measures announced to enforce debt collection

By Jarryl Bryan

From left; Minister of Finance, Winston Jordan; Junior Minister of Finance, Jaipaul Sharma and Deputy Vice Chancellor Dr. Elizabeth Ramlall

Government has unveiled a multi pronged strategy aimed at recovering millions of dollars in outstanding student loans. The strategy is also to close loopholes to ensure that future students are not allowed to slip under the radar when the time comes for them to repay the Student Loan Agency (SLA).
Minister of Finance, Winston Jordan, was addressing the commissioning of a $26.5M SLA Head Office yesterday on the University of Guyana (UG) campus.
Among the measures will be waivers, new stipulations for loan students and guarantors and barring defaulters from leaving the country.
According to Jordan, a 75 percent reduction in the accumulated arrears of interest will be offered to borrowers, should they clear their debts by August 31, 2016.
He added that a 50 percent reduction in the accumulated arrears of interest will be offered if borrowers become solvent by September 30, 2016.
He stated that should the borrower still be in default after the concessionary period would have elapsed, then the full brunt of the debt, inclusive of the accumulated interest, would have to be paid.
“And in keeping with the mandate to strengthen the agency, there will be (further) changes. Loans will be given only to Guyanese students resident in Guyana for 180 days continuously. Student borrowers must (also) be holders of valid Guyana passports.”
“There will be new requirements for borrowers who want to switch from one programme to another,” he added. “Such borrowers must pay back the full sum of all outstanding loans before accessing new loans.”
“Letters of notification will be sent to borrowers informing them of their loan balances. These will be sent (from) one month after the loan is issued.
In the event of a failure to respond positively and a reasonable period has elapsed, the Government will exercise all options to recover the debt.”
According to the Minister, these measures will include litigation. He also warned that where students cannot be located or have failed to respond to communication, the SLA will send notification to the guarantors.
“Guarantors will now be required to produce liability statements and credit reports from the credit bureau. The current form will be updated to include an option to change guarantors.”
The Minister announced that a database of debtors will be posted at all immigration Ports of Entry and Exit. Jordan also announced that students will be required to start repayment on or before the one year grace period, provided that they had secured employment.
Jordan also spoke of consideration being given for a scheme to allow a borrower to be granted a full debt write off if they serve the Government for a stipulated time.
“If they serve for five years after graduation, in designated areas away from his or her normal place of residence, for example a borrower living in Region Four serving in Region Seven, can have the entire balance of his or her loan, at the end of the five year period, written off.”
Jordan’s announcement of borrowers having to repay before they can switch to another course did not go down well with the assembly. According to one onlooker, students sometimes enter the University without a clear idea of their prospective career. This, the onlooker said, sometimes results in switching.
Jordan stressed, however, that students had to seek proper career guidance before coming to the University. He emphasised that since tax payers’ money was funding the agency, then students had to be more responsible than that.
The Minister stated that the government, “Did not have a bottomless pit” in terms of finance.
The Minister made it clear that students have a contractual obligation, otherwise, “A fund that is meant to be revolving would soon dry up and future students will be denied an opportunity to fulfill their dreams.”
“The selfish attitude of many borrowers who are in a position to repay but do not honour their obligations must not be allowed to derail the scheme.
In putting in these measures, we do not want to make life hard or difficult. But we would be derelict in our duties if we allowed hard earned taxpayers’ money to be frittered away in high delinquent rates and low recovery ratios.”
A forensic audit into UG’s SLA had revealed that from the period 1994 to May 2015, some 17,567 or 69.4% of 25,335 student loans were deemed delinquent because students were not honouring their debts.
The audit report contained the names of some 488 persons who were deemed “delinquent” in the loans. The list included the names of prominent Guyanese professionals and politicians. Judging from the fact that these debts span over a decade Sharma, a public accountant, described these as bad debts.