G2K wants management audit at Student’s Loan Bureau
THE Jamaica Labour Party affiliate Generation 2000 (G2K) on Monday called for a management audit to be done at the Student Loan Bureau (SLB), which it branded as an inefficiently run “elitist” organisation that favours richer students over the poorer and more vulnerable.
The organisation, at a press conference in Kingston, said World Bank data on tertiary students in Jamaica showed that 70 per cent of those who accessed loan in 2002 were persons from the higher income brackets.
In the case of the SLB, G2K said the data reveal that approximately 69 per cent of beneficiaries were students listed among the richest quintile and 2.4 per cent among the lowest.
The SLB’s executive director Lenice Barnett was said to be out of office for the week, and the bureau’s public relations officer Natalie Fearon declined to comment on the charges made by G2K.
G2K president Chris Tufton called the SLB loan system a “flawed means test system” which has gotten worst over the years, and told reporters that it was a betrayal of the original and primary mandate of the bureau when it was established in 1970 – to provide financial support to needy students.
Tufton said a case in point was the more than 400 students deregistered by the University of the West Indies (Mona) in the last two semesters, for failing to pay up their tuition fees.
“G2K investigation reveals that a number of these students were either denied SLB loans or did not bother to apply due to their inability to meet stringent requirements, in particular finding guarantors who are acceptable to the SLB,” Tufton told reporters at the press conference at the JLP’s headquarters.
Tufton said, too, that despite receiving funding from international lenders at a five per cent interest, the SLB charged borrowers 16 per cent interest.
“Borrowers are required to start repayment within six months after graduation, and are allowed a maximum of seven years to repay. This means that a teacher who borrowed full tuition fees between 1999 to 2001, would now owe a total of $410,000. For the seven years that teacher would have to pay $15,000 per month, while earning just over $30,000 per month,” Tufton said.
Similarly, Tufton said a doctor who borrowed during that period would now owe $2.1 million and would have to repay nearly $75,000 per month while earning approximately $100,000 per month.
Tufton said that a G2K report entitled ‘Failing the Needy’: Why the Student Loan Bureau Needs Critical Reforms’ showed that the bureau’s less than adequate loan allocation and its operational inefficiencies were the causes for the bureau’s “failures”.
In terms of the SLB’s operations, Tufton said its administrative expenses consume 13 per cent of its total revenues, more than twice the five per cent recommended for such institutions by the World Bank. This, coupled with present plans by the bureau to build a $100-million head office, show inefficient use of resources, he said.
“The SLB needs major restructuring if it is to achieve its mandate of providing adequate loan funds for needy Jamaican students wanting a tertiary education,” Tufton said.
The SLB, in a statement last week, pointed to a high delinquency rate as one of the sore points affecting the success of the bureau’s operations. According to the release, delinquency rate now stands at 21 per cent.
In the last 12 months, the agency took out legal action against 27 delinquent beneficiaries. Of this number, three have since settled out of court.
“It is regrettable that we have to resort to legal action, but having exhausted all other avenues the bureau is left with no choice but to request payments through the courts,” the SLB’s Barnet said in that release.
The G2K, in the meantime, has recommended that the government and the bureau:
. increase the pool of funds, with new and creative ways to monitor repayment;
. establish a credit bureau linked to international networks to address the large numbers of beneficiaries who migrate;
. allow for a longer repayment period of between 15 and 20 years;
. establish an income contingent repayment programme;
. institute a programme of bonding or allowing loan write-offs linked to specific employment institutions;
. give greater focus on efficiency management within the bureau.