Students loan increase puts pressure on fund

The increase in the amount the Students Loan Trust Fund (SLTF) grants to students as loans has led to an increase in demand for loans, which is putting a strain on the fund, says the Chief Executive Officer of the SLTF, Mr Kwaku Agyei Yeboah.

“The students in the past were taking GH¢1,500, now the amount has been increased to 3,000; and because of the increase, it has excited the students and more students are coming for the loans.

“In the past, their major complaint was that the amount was not significant but now, a lot more students are applying because of the higher amount,” he told the Daily Graphic.

The fund increased the amount given to each student as loan annually to a minimum of GH¢2,000 and a maximum of GH¢3,000 beginning the 2017/2018 academic year.

However, Mr Yeboah said, the increment was putting pressure on the fund, but was quick to add that it was looking at alternatives to make the fund sustainable and even self-reliant.

“We are managing and using the recoveries money and ploughed back in, as well as our investments.

“Going forward, the fund will become self-reliant because beyond 2020, there will be a substantial number of students who will be coming to knock on our doors for loans, as products of the Free Senior High School (SHS) Policy will graduate and seek tertiary education.

“We will have students who hitherto couldn’t afford senior high school going. These are brilliant but needy students.  You don’t expect them to end there. They will be going to tertiary institutions and a lot of them will be accessing loans. Overall, we need to go to the drawing table and look for funding sources that will be sustainable in the long term,” he noted.

Statistics

Currently, there are about 90,000 student beneficiaries on the SLTF’s portfolio.

According to its figures, it attracted an average of 15,000 new borrowers per academic year in the 2014/2015, 2015/2016 and 2016/2017 academic years.

However, its recovery rates are around 55 per cent.

“The rate is not bad but we are aiming at doing better. The loans we give have a longer repayment span. When we give a loan to a student, after a four-year course, they have a two-year grace period - the national service period and an extra year - before repayment kicks in.

 “It offers assistance to students to reach their educational goals. The interest is not that high. With the amount of money, you don’t intend to burden the students. We are pushing to increase the recovery rate to about 70 per cent.  We are putting strategies in place, including keeping in touch with those in the diaspora to pay,” he explained.

Data collaboration

Mr Yeboah said the SLTF was also doing a data collaboration with some agencies to identify all students who took the loan and were now in a position to repay.

“We are also discussing better ways of repayment. Some students want to pay but they don’t know how. We are working to utilise the services of mobile and other devices so that we can reach out to all students and get the repayment done,” he added.

Mr Yeboah said even in its current state, its default rate was less than 40 per cent.

“The repayment may look significant but there is a two-year moratorium after they complete school and the quantum they pay is an average of about GH¢50 a month.

“That is why it may not look significant but in terms of having people not paying at all, that is bad debt; we are doing better than commercial banks. We have very few cases that we can call bad debt,” he said.

The Senior Communications Manager of the trust, Mr George Laing, said the fund had a technical resource mobilisation unit which was looking at companies offering scholarship schemes.

He indicated that the fund was in a position to partner such institutions to implement their corporate social responsibility programmes connected to tertiary education.