Easing the SLB burden

It is against this very background that the past Jamaica Labour Party (JLP) administration took a serious look at the dynamics of our education system and took meaningful steps to enhance access and quality.

At the heart of the policy thrust to expand access, enhance quality and improve educational outcomes was the Golding-Holness administration’s revamp of the Students’ Loan Bureau (SLB). While major emphasis continued to be placed on early-childhood education, the administration, by and large, ushered in policies and initiatives aimed at changing the game at the tertiary level, especially as it relates to making it easier to access the means by which higher education may be financed (students loans).

With a gross enrolment rate at the tertiary level of just about 32 per cent, it is important to note that a significant proportion of our students are only able to access training at the tertiary level by securing loans from the SLB. In fact, the size of the SLB loan portfolio (repayment and moratorium accounts) stood at $7.72 billion as at May 2011; and of the 9,973, 8,738, 7,516 and 6,600 applications received in 2010, 2009, 2008 and 2007, respectively, the bureau was able to approve a laudable 9,899, 8,623, 7,447 and 6,470, respectively.

But with an estimated population of 2.7 million and an estimated tertiary cohort of 240,000, it was evident to the JLP administration that there was much left to be desired not only in terms of gross tertiary enrolment, but also in terms of expanding access, which would result in an appreciably greater number of students accessing tertiary education in Jamaica.

Critical to significantly expanding access and increasing tertiary enrolment was the revamp of the SLB’s operating procedures in respect of loans and the servicing of said loans.

Anecdotal information, as well as data from the SLB itself, in relation to delinquency and its worrying stock of non-performing loans, have long told tales of difficulty among loan beneficiaries in honouring their obligations and, more fundamentally, difficulties faced by those seeking loans to access tertiary education in the first place.

And so, the Golding/Holness administration focused, during its incumbency, on two fundamental concerns: a) how to make it easier for our people to access loans at the SLB (which, for many, is the only means by which they will be able to afford tertiary education and pursue their ambitions), and b) how to make it easier and more manageable for loan beneficiaries to service their debt.

With these concerns at the centre of policy outlook and formulation, the administration pursued a policy direction and invoked policy edicts aimed at revolutionising loan administration at the SLB. Whereas some initiatives were implemented, others are works-in-progress, with several being at an advanced stage.

In the main, the policy direction prioritised:

i) Increasing the capitalisation of the SLB;

ii) Lowering interest rates on loans (which then Finance Minister Audley Shaw did when rates were lowered from 12 per cent to nine per cent during the 2011-12 Budget Debate);

iii) Making loans income contingent (loan servicing is contingent upon the debtor being gainfully employed and receiving an income);

iv) Extending the amortisation/payback period such that a student’s loan is treated more like a mortgage;

v) Lowering insurance charges in respect of loans;

vi) Expanding access by increasing the number of beneficiaries (which moved from 6,470 students in 2007 to 9,973 students in 2010;

vii) Increasing the size of the SLB loan portfolio which stood at $848 million in 2007 to more than $3.0 billion in 2011;

viii) Eliminating the need for guarantors;

ix) Overhauling the overly intrusive and faulty needs-assessment mechanism;

x) Establishing a nexus between the envisaged credit bureau and the SLB, which will link back to loan beneficiaries wherever they are around the world;

xi) Revisiting the issue of bonding loan beneficiaries.

While the foregoing policies would not, in and of themselves, amount to a panacea in relation to the hardships many students endure in their quest to access and finance tertiary education in this country, it is pellucid that they have enormous potential to mitigate said hardships and culminate in a paradigm shift vis-à-vis financing tertiary education.

It is no wonder, then, why so many student loan beneficiaries and potential borrowers responded to the SLB’s latest promulgation with such elation. It were as though that proverbial pressure valve was being released.

The promulgation to which I’m referring is the bureau’s amendments to its loan policy to ease the financial burden on beneficiaries and, in the process, encourage increased repayment. According to the SLB, new loans disbursed by the bureau commencing academic year 2012-13 under the targeted loan facility, standard loan tenure will be adjusted upwards from the current 10 years to 15 years. This is a profound step towards having an SLB loan being treated like a mortgage – as envisaged and advocated by the former administration.

Further to that, the bureau announced that loan tenure will be extended to a maximum of 20 years for persons who read for degrees in programmes that exceed the typical three-year to four-year duration and attract higher tuition costs. In the case of existing loans, the bureau contends, the extension in tenure would be applied on a case-by-case basis as requested by the beneficiary. And with insurance charged on loans being set to move from $1 per $1,000 to 60 cents per $1,000, there is hardly any doubt as to just how broadened the smile on the faces of our students have become.

Ode to the hindsight, insight and foresight of the Golding/Holness incumbency.

When I think of these promulgations, I cannot help but contemplate as to whether our young people would have been more inclined to come off the fence and come out on December 29 to exercise their franchise and elect an administration that had the vision and fixity of purpose to set the stage for a state-led response to their hardships and the mitigation of their plight as borrowers.

With the stage set, we are well on our way to expanding access to tertiary education in Jamaica and benefiting from the most worthwhile invest of all – an investment in the education of our people.

But alas, instead of such good news streaming via the airwaves into their living rooms and on their smartphones, what was served up to many of our young people in the middle of an intense general election campaign? A number of them, embarrassingly, had their names and photographs published in the media.

I am not for a minute condoning or encouraging delinquency and irresponsibility among SLB loan beneficiaries. To my mind, it was most untimely and underscores the need for more of our energies to be channelled into making the SLB, and by extension tertiary education in this country, more accessible, and loan repayment more affordable.

■ Marlon Morgan is a vice-president of G2K and former adviser/consultant in the Ministry of Education. Email feedback to columns@gleanerjm.com.