If anyone was expecting the announcement of a comprehensive strategy to tackle the student debt problem, both in terms of existing non-performing debt already on the books, and the processing and managing of new debt through the Student Loan Programme, they were to be disappointed.
Instead we were dealt another round of ad hoc adventurism that seems to plague the new administration from time to time. It was reported in the media that a travel ban was to be imposed on defaulters of the University of Guyana Loan Programme, among other stop-gap measures.
This time the spokesman was Finance Minister Winston Jordan, who in his role as steward of the public purse, seemed to adopt a strategy to the loan crisis predicated on short-term repressive measures, beginning with the operations at the Cheddi Jagan International Airport to restrict the free movement of citizens who are loan defaulters. The carrot offered to the big stick of restricted travel, was a 75% reduction in interest accrued for defaulters who can somehow repay their loans by August 31 and September 30 respectively, or a 50% reduction in arrears interest if the borrower can bring the debt into current status (up-to-date) by the dates aforementioned. However, if the borrower subsequently lapses in payment afterwards, all the arrears interest written off would immediately be added back to the loan.
Jordan further said that “all information on recalcitrant borrowers will eventually be put at all immigration points and we will set up a desk at the same time for those who would be stopped from travelling to make the necessary arrangement for payment of the loan or debt prior to departure.” Appearing before the Parliamentary Sectoral Committee on Foreign Relations on Wednesday, Minister of Citizenship Winston Felix said he had not received any instructions to execute a ‘travel ban’ on UG loan defaulters. In fact, both he and Minister of Foreign Affairs Carl Greenidge took issue with the description ‘travel ban’ which had appeared in the press, and raised the question whether Minister Jordan had used it at all.
This is, of course, to play with words; even although the Minister of Finance might not have used that precise term, he did say that student defaulters “would be stopped from travelling” unless they arrange for payment of their loan or debt. That, as the press recognized, to all intents and purposes constitutes a ban. Now if it is the case that that is not what the Minister intended to convey, then he should clarify the issue without further ado. However, since that has not been done to date – and he spoke on July 29 – one must assume that he has not been misrepresented by either the media or the public.
It might be noted that nowhere in his remarks did Minister Jordan mention whether a desk had been set up at the Loan Agency itself to process calls, requests for information, and overseas payments including provisions for wire transfers. In an increasingly digital and technologically savvy world, the Loan Agency has no online platform that permits online payments of any sort; there is not even a basic PayPal arrangement, the sort of mechanism that could have been organised some years ago. The walk-in arrangement currently in place is not only archaic but inconvenient in these modern times.
As was said before in these columns, any repayment process this government is proposing has to be practical, convenient for borrowers and work efficiently to ensure the sustainability of the fund. To make certain student loans are manageable, this administration has to consider reasonable not draconian measures. For example, the UK government garnishes wages in a ‘mortgage-style’ system of equal monthly instalments which starts when the graduate earns over a specified threshold, set at 85% of average annual earnings for full-time workers.
The average university student in Guyana leaves the institution with close to $500,000 in debt which accrues interest annually. Has the government considered that these repayments plans, like those in the UK, ought to be income-driven? Can it, for example, produce figures on the current unemployment rate for all new bachelor’s degree recipients, as well as state the number of new jobs they have created since taking office over a year ago?
Failing to adopt a more reasoned and reasonable approach to the student loan crisis, providing real incentives to persons with the means to repay their debt, real alternatives to those who don’t have the means, and real access to information for all beyond the newspapers, television and radio, this government may well find itself alienated from a sizeable chunk of affected citizens on both sides of the political and economic divide.
