University of Guyana (UG) Vice-Chancellor Jacob Opadeyi believes banks, credit unions and other financial institutions should be responsible for administering loans for university students because they are better positioned to collect repayments.
He made the suggestion on Tuesday during consultations with the university’s staff and students on a proposed hike in tuition fees. Further, students will only be required to commence payment on the loan(s) taken once they start working, and will have ten years to pay off the entire amount. Opadeyi said that he has already commenced talks with the Ministry of Finance towards making this suggestion a reality.
The Student Loan Fund, administered by the Student Loan Agency, which is a body of the Ministry of Finance, is not properly managed and Opadeyi says this has several negative implications for the university, including threatening one of its revenues sources.
Students who have graduated, he said, are not paying their loans since there is no mechanism to ensure they make the payments. According to a source, the Student Loan Fund, as of 2011, had assets of around $8.6 billion. However, around $7.3 billion of the amount are receivables, which means that only about $1.3 billion is actually in the fund.
The staggeringly high receivables point in the direction of poor collection on loans from students, who have up to 15 years to repay a year after graduation. Many are still in Guyana and are either not up-to-date with payments, or are not paying at all. There are also persons who have migrated and are not making payments. Some of these persons stopped making payments after migrating, while others migrated before making a single payment.
Opadeyi noted that commercial banks in Guyana are doing exceedingly well and he postulated that they will be more efficient at collecting loans from students who sourced loans.
“One thing the banks are good at doing is collecting their money…if you default in one bank, the others are aware…the banks in Guyana are doing well because people are paying them back,” he argued.