STUDENT LOANS BEGIN TO BITE PAINFULLY ON THE SCHEME BENEFICIARIES
A few days ago, on Friday the 22 of May 2020, the Bachelors of clinical medicine and community health graduates. (BCMch) petitioned the speaker of Uganda Hon. Rebecca Kadaga on their frustration of lack of employment and yet the Uganda Higher Education students Financing Board is demanding according to the Board policy that they start paying back their respective loans.
The HESFB policy provides that each beneficiary on completion of his/her studies shall be given a grace period of one year holiday after which they begin to pay back their respective loans regardless of with or without employment at an annual interest of 7%.
These payments are to be made for the exact number of years that one spent in school as stipulated by the admission letter. It could be three, four, or five. Any inconsistencies or attempts to dodge paying this loan amounts to 6months in prison or a fine of not more than shs2million. Let’s not forget that
There is not much that Kadaga can do about this HESFB agenda as these students were very much aware of these policies before they signed up for this scheme in the first place.
In addition, the board is tasked with collecting back these loans as this money will help pay for the other Scheme beneficiaries. It looks like payback time now. And I can tell you its a very ugly reality.
To ensure that the students pay back what they borrowed, they are required to have a financial card, this card basically puts them on a Credit Reference Bureau. This means their behavior in regards to paying loans is closely monitored.
In the financial year 2019/2020 the government allocated shs30.182 billion to the HESFB. And over 1,834 beneficiaries registered. Since its endorsement and implementation, the loan scheme has had tremendous improvements in achieving its key objectives which are to increase equitable access to higher education in Uganda.
Well at least there is a visible change in this area. Unfortunately like any other system, there is always a toxic consequence. This loan scheme initiative has been excellent news to universities as we have seen an increase in the number of higher education institutions rise from 33 in 2010/2011 to 47 in 2020. More students have registered for higher education. As we speak.
The loan scheme is responsible for 10,024 students across a few universities. More Ugandans are accessing higher education. This creates a demand curve. And just like any business, Universities increase tuition fees because the students are willing to pay, and then there is the student loan scheme with much available money from the government. Now the university administrators are fighting to get the most loan scheme students under their respective institutions.
For the students it’s actually saddening to realize that you have graduated and immediately have to carry a burden of loans to be paid back in the shortest time possible.
Let’s do some simple mathematics. Initially, the loan amount for science students was put at a capping of a weighted average of shs4million to cater for pedagogical components. (Tuition, research fees, functional fees). Now this is a generalization though institutes like UCU and KIU courses are a little more expensive than other participating institutions.
On average a science course may go for 4-6 years. Let’s go for 4 years. (undergraduate program) These are 8 semesters which accumulates to UGX 32million at the end of the course. Add the shs2.24million from the annual 7% interest. Since its an annual interest you understand that this will total up to UGX 8.96million in interests.
Overall total to be paid back in 5 years after graduating (keep in mind the one-year Grace period.) So we come to UGX 40.96 million. This is if the loanee is very disciplined and making their payments regularly. Whaaaat?!!!!!. Ridiculous.
Give me a reason why someone will fail to get a psychosis with this outstanding debt?. Ten years from now, I predict the loan scheme debt may furiously rival or even pass the Uganda personal loan debt.
Story Written and Compiled by Isiret Tukei.
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