The University of Guyana (UG) Student Loan Fund has received close to $9 billion since it was created in 1994 and is a revolving one, as such, the cutting of money intended for it this year should not disturb students’ access to loans, says APNU Shadow Finance Minister Carl Greenidge.
In a letter carried in the June 15th edition of the Sunday Stabroek, Greenidge noted that the fund was started in 1994, and that with the exception of this year’s contribution government has allocated around $450 million to the fund annually since its inception.
These contributions, he went on, will amount to approximately $9 billion (counting this year’s contribution) over a twenty-year period. He also explained that students who borrow loans are mandated to complete repayment of said loans in fifteen years at a very low interest rate.
Greenidge believes that “Since the Fund has been in existence since 1994 it should now be mature or flush with cash…how then can the fund be unable to extend loans to this year’s students? The Fund cannot be exhausted at this point in its lifecycle simply as a result of government’s inability to pay this year’s tranche…the story of the consequential unavailability of funds in 2014 for student loans voiced by government spokesmen … is utterly untrue.”
His letter was in response to a statement and fears that students looking to source loans to attend UG this year will not be able to do so because the amounts were cut by the National Assembly.
During the consideration of the estimates earlier this year the Alliance for Change (AFC) and A Partnership for National Unity (APNU) used their combined superior seating to cut part of the Finance Ministry’s budget. The amounts cut included Guyana’s annual contribution to the Caribbean Development Bank (GDB), and equity contributions for the Amaila Falls Project which amount to $18.56 billion. These amounts were tied to a $450 million allocation intended for the Student Loan Fund.
The opposition parties had requested that the amounts be delinked, but cut the entire amount after government said this could not be done. With the next academic semester less than three months away there are fears that loans will not be available, which therefore means that students will be forced to pay cash or will not be able to attend university from September 2014.
The status of the Loan Fund
It has long been known that many students, after graduating from UG become delinquent with their loan payments. There are many past students still residing in Guyana who are not repaying their loans, while others have migrated without repaying same.
The guarantors of loan recipients are supposed to be held accountable for the loans if the borrower is delinquent, however even this provision is not enforced efficiently.
Stabroek News has attempted to ascertain the status of the Fund, including the current balance; the percentage of students making repayments; and the amount of interest collected so far. This endeavour however, has been unsuccessful.
On Monday this newspaper spoke to the Finance Ministry’s Financial Secretary Neermal Rekha who declined to comment on the topic. Rekha also declined to speak on the management of the fund or the amount of money it holds at this time.
Last Monday, Finance Minister Ashni Singh conceded that the repayment of loans taken is not where he would like it to be, and that the ministry is exploring ways to improve the system for recollection.