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Govt to hunt student loan defaulters at workplaces

Kyambogo University Graduates

KAMPALA, UGANDA: The government has finalised arrangements to track beneficiaries of its student loan scheme at their jobs to recover the money.

Highly-placed sources say the government has put in place a purpose-built virtual platform where employers will be required to log in to ascertain whether their new hires took a study loan or not.

If beneficiaries, the employer will be obliged to deduct not more than 30 percent of the employee’s net monthly salary and remit the money to Higher Education Students Financing Board (HESFB), according to its spokesperson, Mr Bob Nuwagira.

“An employer who knowingly doesn’t notify the board of the employment of a person who has received a student loan, commits an offence and is liable, on conviction, to a fine not exceeding two hundred and forty currency points (Shs4.8m), or imprisonment not exceeding ten years, or both,” he added.

 This newspaper understands that HESFB targets to recover Shs32b over the next six to 12 years from 3,090 students who have graduated out of the total 11,187 beneficiaries since 2014.

Among the takers of the study loan is Ms Gloria Namboira, who graduated from Kyambogo University with a diploma in Bio-Medical Engineering.

She said she supports the tracking of beneficiaries to their places of work.

“These people [government] have been there for us in hard times when we were unable to pay tuition for ourselves. So, deducting a certain amount from our salaries is not bad because we have to repay the loan,” Ms Namboira said.

Although she is still jobless, Ms Namboira said she would start repaying the loan  from any freelance work.

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Mr Nuwagira said they have recovered Shs400 million and 25 students have fully repaid their loans, even before the due date.

The Financing Board, according to government officials, will write to employers in both the public and private sector to comply with the development.

The decision follows many loan beneficiaries getting employed after their studies, but declining to refund the money.
This means students who studied on government loans will, in addition to Pay As You Earn (PAYE), the five percent National Social Security Fund (NSSF), and Local Service tax deductions, also surrender up part of their monthly salary to clear the loan.

The Higher Education Students Financing Board was established in 2014 to provide loans and scholarships to Ugandan students who have qualified to pursue accredited programmes in the recognised institutions of higher learning, but are financially unable.

Mr Nuwagira said some beneficiaries have begun repaying the loans even when they are still in school. 

“The parents help this category in repaying small amounts such that by the time they finish school, their loan portfolio is small. Any monies paid in before the end of the grace period does not attract interest,”  he said.

The maximum repayment period is twice the study period in addition to the grace period of one year.  This means a student who studies for a course of four years has nine years to reimburse the study loan.

 The Financing Board can also reschedule a beneficiary’s repayment plan once they fail to get employed after graduating.
 Once the grace period of repaying the loan expires, it attracts higher interest rates.

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To-date, there has not been an elaborate system to track loan beneficiaries who sometimes could change names, location and or simply run away and hide.

The loan scheme has, however, not been without trouble. In the latest cohort of beneficiaries, 47 students are due to lose their loan awards after they declared their parents dead, or themselves disabled, in order to fluke the study opportunity.

Govt stops loan support 
Last week, government cancelled study loans for 47 university students who lied about the death of their parents.The authorities in charge of the government loan scheme ordered the affected students to refund public funds after it emerged that others either lied about disability or forged unspecified documents.

The students are from various public and private universities, including Makerere, Kampala International University, Kabale, Kyambogo, and Ndejje University. The affected students will sponsor themselves effective the second semester of their year one of study.  

“In accordance with Section 38 of the Higher Education Students Financing Act, an applicant who makes a false statement to the board commits an offence. It is against this background that the board decided to terminate your loans with immediate effect,” a letter addressed to one of the beneficiaries read in part.

The names of the affected students were not disclosed to protect the parents and other family members who did not take part in the forgeries.

Source: Daily Monitor


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