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Wednesday, 23 October 2013
IS THE NRM GOVT. SERIOUS ABOUT THE EDUCATIONAL LOAN SCHEME ?
Dear all,
It is not clear whether the NRM Govt. is serious about the educational loan scheme. The shs 5bn into it is a drop in the ocean, and Govt. ought to know that the commitment goes on till the students finish their studies.
Below are our ideas and those of others that the NRM Govt. doesnot seem to take seriosly in implementing the scheme, meaning that it WILL NOT be sustainable.
William Kituuka
In his 2001 Election manifesto, President Museveni promised to implement an Educational Loan Scheme, today, ten years after, nothing of the type is in place!
Attention: The Hon. Minister of State for Higher Education; Ministry of Education & Sports
The 2003/04 academic year for Universities and tertiary institutions is starting late September 2003 without an Educational Loan Scheme in place. This state of affairs is very sad on the part of Makerere University Private Students’ Parents’ Association (MUPRISPA) Ltd. The effort to see the Educational Loan Scheme was started by the association in July 2001. The association (MUPRISPA) went at length to appeal to His Excellency the President to have the scheme in place. This was followed by an appeal to the Hon. Minister of Finance to incorporate a provision for the Educational loan scheme in his 2002/03 budget. Fortunately, the Hon. Minister incorporated shs 400m for studies to see the scheme in place. The association went ahead to write “A comprehensive feasible and sustainable educational loan scheme in Uganda,” and also, “Identifying clientele for the educational loan scheme and loan recovery measures.” All this was done to see that the educational loan scheme is implemented as soon as possible given the suffering of the parents/benefactors to meet the tuition fees lump some and also beat the University deadlines. Unfortunately, the scheme seems to be a long way from implementation with a lot of uncertainty.
In my letter dated July 9, 2001 to His Excellency the President of Uganda, “The students’ loan scheme at Makerere University and parents involvement,” I on behalf of Makerere University Private Students’ Parents’ Association wrote: “The parents are happy to learn that in your 2001 Election Manifesto among other things you clearly stated thus, “My Government will establish an Educational Loan Scheme to increase access to higher education.” Given this position, the parents have endeavoured to come up with “The feasibility of a Student Loan Scheme attached; this according to the parents as a starting point in helping Government to see to the implementation of your manifesto.”
“The feasibility has a background quoting various authorities and their emphasis of the necessity of the said scheme. The report also shows how the private scheme has made a substantial contribution to sustain the University, and it is no surprise that senior lecturers can earn over the equivalent of US $1,300 plus the improved infrastructure at the University to mention but a few.”
“However, it is also realized the scheme bags near to U shs 16bn to date from parents majority of whom are paying a great cost to see the finance of their children’s education. It is bad news to learn of the rate at which parents are parting with value, like land, houses to finance this education! In essence, the parents are being impoverished a situation that is likely to endanger the future of the families.”
Given the situation where many students are failing to raise tuition and others dropping off as they fail to raise the funds, it has become absolutely important that Government takes the Student Loan Scheme as a priority that should be implemented as soon as possible.
Much as our association has all along been interested in the development of the loan scheme, it is not until the story: “Shs 6bn loan for students,” that appeared in the Sunrise news paper of September 5-12, 2003 that we may be in for a shock when the final students’ loan scheme comes to reality.
The scheme may flop miserably given the trends seen so far. Among these, the Uganda Educational Loan Scheme MUST be original given Uganda’s circumstances and not a duplication of what goes on elsewhere with Student loan schemes. It is against this background that MUPRISPA does not approve of students being borrowers irrespective of the courses they are taking in the higher institutions of learning. What MUPRISPA identified was that parents/benefactors have a cash flow problem given the amount of money most of them earn as salary and the competing needs to which they spend this money on. So, it remains in the Uganda focus that the scheme should actually bail out the parent/benefactor who foots the bill now; reasons being that the chances of students meeting repayment after is uncertain given the unemployment levels in the economy. Second, that students previously helped with post dated cheques by lecturers as guarantors had greatly absconded and the liability had remained to the lecturers to pay back! Third, that many Ugandans had shown that they take funds from Government as if manna from Government, hence reluctant to pay back. Fourth, that a situation where the loan scheme would be managed as a micro finance undertaking stood higher chances of sustainability, and also more acceptable to prospect funding organizations and less likely to be abused.
The other trend observed is the categorization of some courses as more worthy beneficiaries of the loan scheme, hence chances of ruling out students of Humanities to take loans. This position is unacceptable as it shall deny Career Development for students who love to pursue courses in Humanities. And, it is equally true that as Uganda progresses it will need all these categories of manpower from professors to those who may end up as self employed.
It has also been noted that the scheme may award loans that could go up to shs 14m. This is equally unacceptable. Loans should strictly reflect the tuition fees payable and basic course projects and tour needs by student beneficiaries.
If Government goes ahead to grant loans to students payable after they have graduated, it will be most unfortunate. The scheme will not only be unsustainable from the word go, but it will also register high default rates and suicide by some beneficiaries on failing to meet repayment may not be ruled out.
The Sunrise newspaper talked about shs 6bn for the loan scheme. This is a drop in the ocean. Our proposal is for Government to procure at least US $40m World Bank (IDA) loan and put this in the hands of the Loan Secretariat and shs 6bn to be the yearly addition to the scheme from the Government budget to ensure sustainability as the repayments are made to the creditor.
The Proposals briefly are:
1) Repayment period to be twice the number of years the student’s course duration in the higher institution of learning;
2) Monthly equal installments repayment for the duration, or as may be agreed depending on the parent/beneficiary income expectation;
3) Membership subscription fee not less that shs 100,000 payable on enrolment to the scheme;
4) 5% Commitment fee on each semester fees payable to the Loan Secretariat by each beneficiary;
5) No other interest payable;
6) At least one guarantor to the parent/benefactor and the student being the 3rd party;
7) Have public servants’ children automatically qualifying to join the scheme (mostly those in lower salary category levels);
8) Ensure that each loan beneficiary open up a Standing Order with his bankers to ensure easy recovery of the funds;
9) Terminate the loan in case 3 consecutive installments are not paid;
10) Have diploma holders/Masters and Ph D students out of the scheme;
11) Put a law in place to ensure that at no moment in time does Government encroach on the Loan Scheme funds;
12) Give all applicants a chance to apply and screen them according to set procedures;
13) Ensure that the Loan Secretariat is run on own generated funds from membership fee and the 5% Commitment fee;
14) Loans should not consider students opting for studies outside Uganda for the start;
15) Vet applicants using Schools attended, Occupation of parent/beneficiary (ability to pay University fees), size of families and NOT LC infrastructure which has proven corrupt in many instances;
William Kituuka.
It is not clear whether the NRM Govt. is serious about the educational loan scheme. The shs 5bn into it is a drop in the ocean, and Govt. ought to know that the commitment goes on till the students finish their studies.
Below are our ideas and those of others that the NRM Govt. doesnot seem to take seriosly in implementing the scheme, meaning that it WILL NOT be sustainable.
William Kituuka
A Student Loan Scheme in Uganda: A PRESS RELEASE Dated: September 22, 2003
In his 2001 Election manifesto, President Museveni promised to implement an Educational Loan Scheme, today, ten years after, nothing of the type is in place!
Attention: The Hon. Minister of State for Higher Education; Ministry of Education & Sports
The 2003/04 academic year for Universities and tertiary institutions is starting late September 2003 without an Educational Loan Scheme in place. This state of affairs is very sad on the part of Makerere University Private Students’ Parents’ Association (MUPRISPA) Ltd. The effort to see the Educational Loan Scheme was started by the association in July 2001. The association (MUPRISPA) went at length to appeal to His Excellency the President to have the scheme in place. This was followed by an appeal to the Hon. Minister of Finance to incorporate a provision for the Educational loan scheme in his 2002/03 budget. Fortunately, the Hon. Minister incorporated shs 400m for studies to see the scheme in place. The association went ahead to write “A comprehensive feasible and sustainable educational loan scheme in Uganda,” and also, “Identifying clientele for the educational loan scheme and loan recovery measures.” All this was done to see that the educational loan scheme is implemented as soon as possible given the suffering of the parents/benefactors to meet the tuition fees lump some and also beat the University deadlines. Unfortunately, the scheme seems to be a long way from implementation with a lot of uncertainty.
In my letter dated July 9, 2001 to His Excellency the President of Uganda, “The students’ loan scheme at Makerere University and parents involvement,” I on behalf of Makerere University Private Students’ Parents’ Association wrote: “The parents are happy to learn that in your 2001 Election Manifesto among other things you clearly stated thus, “My Government will establish an Educational Loan Scheme to increase access to higher education.” Given this position, the parents have endeavoured to come up with “The feasibility of a Student Loan Scheme attached; this according to the parents as a starting point in helping Government to see to the implementation of your manifesto.”
“The feasibility has a background quoting various authorities and their emphasis of the necessity of the said scheme. The report also shows how the private scheme has made a substantial contribution to sustain the University, and it is no surprise that senior lecturers can earn over the equivalent of US $1,300 plus the improved infrastructure at the University to mention but a few.”
“However, it is also realized the scheme bags near to U shs 16bn to date from parents majority of whom are paying a great cost to see the finance of their children’s education. It is bad news to learn of the rate at which parents are parting with value, like land, houses to finance this education! In essence, the parents are being impoverished a situation that is likely to endanger the future of the families.”
Given the situation where many students are failing to raise tuition and others dropping off as they fail to raise the funds, it has become absolutely important that Government takes the Student Loan Scheme as a priority that should be implemented as soon as possible.
Much as our association has all along been interested in the development of the loan scheme, it is not until the story: “Shs 6bn loan for students,” that appeared in the Sunrise news paper of September 5-12, 2003 that we may be in for a shock when the final students’ loan scheme comes to reality.
The scheme may flop miserably given the trends seen so far. Among these, the Uganda Educational Loan Scheme MUST be original given Uganda’s circumstances and not a duplication of what goes on elsewhere with Student loan schemes. It is against this background that MUPRISPA does not approve of students being borrowers irrespective of the courses they are taking in the higher institutions of learning. What MUPRISPA identified was that parents/benefactors have a cash flow problem given the amount of money most of them earn as salary and the competing needs to which they spend this money on. So, it remains in the Uganda focus that the scheme should actually bail out the parent/benefactor who foots the bill now; reasons being that the chances of students meeting repayment after is uncertain given the unemployment levels in the economy. Second, that students previously helped with post dated cheques by lecturers as guarantors had greatly absconded and the liability had remained to the lecturers to pay back! Third, that many Ugandans had shown that they take funds from Government as if manna from Government, hence reluctant to pay back. Fourth, that a situation where the loan scheme would be managed as a micro finance undertaking stood higher chances of sustainability, and also more acceptable to prospect funding organizations and less likely to be abused.
The other trend observed is the categorization of some courses as more worthy beneficiaries of the loan scheme, hence chances of ruling out students of Humanities to take loans. This position is unacceptable as it shall deny Career Development for students who love to pursue courses in Humanities. And, it is equally true that as Uganda progresses it will need all these categories of manpower from professors to those who may end up as self employed.
It has also been noted that the scheme may award loans that could go up to shs 14m. This is equally unacceptable. Loans should strictly reflect the tuition fees payable and basic course projects and tour needs by student beneficiaries.
If Government goes ahead to grant loans to students payable after they have graduated, it will be most unfortunate. The scheme will not only be unsustainable from the word go, but it will also register high default rates and suicide by some beneficiaries on failing to meet repayment may not be ruled out.
The Sunrise newspaper talked about shs 6bn for the loan scheme. This is a drop in the ocean. Our proposal is for Government to procure at least US $40m World Bank (IDA) loan and put this in the hands of the Loan Secretariat and shs 6bn to be the yearly addition to the scheme from the Government budget to ensure sustainability as the repayments are made to the creditor.
The Proposals briefly are:
1) Repayment period to be twice the number of years the student’s course duration in the higher institution of learning;
2) Monthly equal installments repayment for the duration, or as may be agreed depending on the parent/beneficiary income expectation;
3) Membership subscription fee not less that shs 100,000 payable on enrolment to the scheme;
4) 5% Commitment fee on each semester fees payable to the Loan Secretariat by each beneficiary;
5) No other interest payable;
6) At least one guarantor to the parent/benefactor and the student being the 3rd party;
7) Have public servants’ children automatically qualifying to join the scheme (mostly those in lower salary category levels);
8) Ensure that each loan beneficiary open up a Standing Order with his bankers to ensure easy recovery of the funds;
9) Terminate the loan in case 3 consecutive installments are not paid;
10) Have diploma holders/Masters and Ph D students out of the scheme;
11) Put a law in place to ensure that at no moment in time does Government encroach on the Loan Scheme funds;
12) Give all applicants a chance to apply and screen them according to set procedures;
13) Ensure that the Loan Secretariat is run on own generated funds from membership fee and the 5% Commitment fee;
14) Loans should not consider students opting for studies outside Uganda for the start;
15) Vet applicants using Schools attended, Occupation of parent/beneficiary (ability to pay University fees), size of families and NOT LC infrastructure which has proven corrupt in many instances;
William Kituuka.
Government tables Bill to fund higher education loan scheme
The
government has tabled a Bill to fund the higher education loan scheme.
The Higher Education Students Financing Bill 2013 was sent to the
Education Committee for consideration, and following the Speaker’s
directive, will be back in the House for debate in 45 days. “Given the
importance of this Bill, I am going to be strict on the 45-day rule,” Ms
Rebecca Kadaga said.
The
Bill, which was tabled by Education minister Jessica Alupo, is to fill
the void and establish a scheme to finance higher education in Uganda
and establish the higher education students financing board and a fund
to finance the scheme.
If
passed, the Bill will make it easier for students to pursue higher
education in accredited and recognized institutions. “Due to the
improved access to basic education through the introduction of universal
primary and secondary education, there is currently an upsurge in the
number of school-going children...” the Bill’s preamble reads.
According
to the Bill, a loan shall cover tuition fees, functional fees and
research fees, where required for the course or programme of study. It
may also include specified amounts in respect of accommodation or meals,
where the Board determines that the funds are sufficient to provide for
those items.
However,
according to the Bill, the board, the implementing body headed by an
executive director, shall not be responsible for any additional fees
required or incurred as a result of the change in course or programme.
The board shall also be responsible for the selection of the type of courses awarded for the loan.
After
applying for the loan, the board will consider the application in 21
days and a person aggrieved by the board’s decision may appeal to the
minister of Education within seven days after receipt of the
notification.
On top of the loans, the Board shall also give out
scholarship as determined by the board in courses critical to national
development.
Every
student loan shall be repayable with interest that shall be determined
by the minister in consultation with the minister of Finance.
Tuesday, October 22, 2013
The proposed students’ loan scheme: opportunity to right the wrongs of financing University education
Stephen Christian Kaheru
With
the introduction of Universal Primary Education (UPE) in 1997, primary
schools in Uganda saw an upsurge in numbers of pupils. The drastic swell
did not only overwhelm the infrastructure but also the teacher-pupil
ratio and quality of education soon became a fundamental issue.
The
pressure on the infrastructure and teachers aside, the UPE bulge soon
manifested itself in soaring numbers of primary school pupils joining
secondary school. Some years later, in 2007, the Government introduced
Universal Secondary Education (USE) paving the way for more boys and
girls to transition to secondary school.
For some time now, UPE
and USE have been implemented as means-blind interventions to enhancing
access to basic education. However, the attainment of basic education
only is far from the end of the educational trajectory of many young
Ugandans.
Opportunely, with increased access to basic education,
UPE together with USE have had a combined ripple effect of increasing
enrollment at institutions of higher learning.
The Government
support for higher education at public universities has been receding
since the 1990s. The reduced support, administered in gradual doses, has
been characterised by trimmed budgetary allocations compelling cuts in
numbers of student admitted.
The unfavourable funding climate also
affected students’ welfare envelope resulting in reduced allowances and
in some cases, scrapping them. In spite of these adjustments, the
numbers of students completing secondary school and qualifying with two
principal passes to enroll at University have been escalating.
About
65,000 boys and girls qualified to enroll at university and other
tertiary institutions this year, compared to nearly 62,000 in 2010. The
Government has been supporting about 4,000 students every year at the
five public universities including Busitema, Gulu, Kyambogo, Mbarara and
Makerere.
For a number of years, Makerere, the country’s oldest
public university maintained its intake of the Government sponsored
students at about 2000 of those who qualified for university enrolment.
This
leaves scores of secondary school students enrolling at private
universities while others find solace in pursuing their academic
journeys at other tertiary institutions. Clearly, not every student who
passes A-level can enroll at university. In consideration of the rising
demand for higher education, the state has proposed introducing a loan
scheme to enable under resourced students completing A-level to
consummate their schooling with university education.
The proposal is a
laudable step in enhancing access to opportunities for higher education.
While addressing members of the National Executive Committee (NEC) on
April 24, President Museveni regretted that the students’ loan scheme
had not yet been implemented.
He, however, sounded resolute on finding a way round it and even appealed for support on that front.
Uganda’s
history with interventions aimed at easing access to higher education
through minimising barriers is not so lustrous. While there have been
some initiatives designed to promote access to university education,
the implementation of some of these schemes has been fraught with
challenges, prominent among them being modality of operation.
No
sooner had the Government introduced the university quota system in 2005
than it sparked criticism with more and more dissenting voices
questioning its modus operandi which sidelined its intended
beneficiaries.
Recently, there were
media reports that an internal audit report of Makerere University had
exposed a number of irregularities in awarding scholarships. While these
experiences are certainly not worth writing home about, therein lies
the ground to build a steady foundation for the proposed students’ loans
scheme.
The question of who is deserving of financial support is
pivotal to the implementation of the loan scheme as much as it is for
an equitable quota system for university admissions.
The inability to
assess genuine need as the basis for eligibility of support is a path
that we should not tread again. A fundamental aspect of student loan
scheme that the Government will need to consider seriously is to have
the loans based on real need.
One of the flaws of the quota
system was that it failed to meet its objective of easing access for
students from underprivileged parts of the country. In the end, students
from urban-based well to do families who had enjoyed high quality
pre-university education made it on the beneficiary list, edging out
their ill-facilitated counterparts in rural schools.
An
institutionalised means of accurately assessing the socioeconomic status
of applicants as the basis for awarding of loans underpins the success
of the proposed scheme.
However, this implies
that the robustness of means testing is at the heart of identifying the
genuinely needy. This can only be based on reliable data and, therefore,
investment in collection of reliable data cannot be overemphasised.
The experience of
Swaziland, Lesotho and Ethiopia where all university students are
granted loans has shown that the more focused student loan programmes
are, the higher their chances of sustainability.
As long as the
scheme does not have an in-built mechanism of targeting the truly needy,
it is unlikely that it will serve the purpose of enhancing access to
university education for scores of deserving but financially constrained
students.
Student loan schemes in Africa, just like some
scholarship programmes which carry repayment obligations have, in many
countries, registered dismal recollection rates.
In Kenya, a number of
graduates who benefitted from loans from Higher Education Loans Board
(HELB) have not honoured their obligations to date and are all over the
world. Some years back when loan recovery hit prohibitive levels, the
Government of Botswana established the Loans Recovery Service Division
as it considered outsourcing loan recovery.
The need for a sturdy
system to track debtors so as to bolster collections is central to the
operation of the loan scheme as a revolving fund. In as much as loans
have to be recovered, it is also essential that effort is made to raise
awareness of all beneficiaries that loan repayment is the mechanism for
keeping the fund running.
As with scholarship programmes, it will
be critical to have strong administrative infrastructure put in place
for the management of student loan scheme. The case for administering
the students’ loans through a dedicated agency has its strong points. If
well managed, a separate body such as the Higher Education Loans Board
(HELB) in Kenya,
Higher Education Students Loans Board (HESLB) in
Tanzania, Student Financing Agency for Rwanda (SFAR) in Rwanda, Student
Loan Trust (SLTF) in Ghana ensures a degree of administrative
transparency. In addition, these semi-autonomous agencies provide a
means to avert government bureaucracy that usually tends to get bogged
down with inadequate resources and systems.
Right from the onset,
it is vital that the operations of the students’ loan schemes be
anchored in an enabling legal environment. The success of loan programme
is dependant on the legal foundation in which it is buttressed and of
particular importance is the legal backing for loan recovery.
Enabling
legislation is inextricably linked to loan recovery in that, however
meticulous the tracking of debtors is, without legal ground,
beneficiaries cannot be compelled to pay back. Likewise, even when
recovery is predicated on exacting deductions by the employer in
collaboration with other statutory mechanisms as is the practice in
Ethiopia, Namibia, Kenya; it has to be legally provided for.
Student
loan schemes have been implemented to serve various objectives in
different countries. In Botswana, the loan scheme was open to all
students. However, the burden of repayment varied with the field of
study.
South Africa’s
National Student Financial Scheme mainly served a completion objective
by converting 40% of the loan to a grant for students who upheld an
exceptional academic standing. In Lesotho, the student loan scheme was,
among other aims, employed as disincentive for brain drain requiring
graduates who chose to emigrate to pay back 100% of the cost.
By
President Museveni affirming that the students’ loan scheme would lift a
heavy burden off parents, it is implicit that a fundamental objective
of the proposed scheme is to ease access to higher education.
However, central to
this intervention is the sustainability of the resource flow for the
scheme. All said and done, it will be in the ability to sustain the
proposed scheme as a pipeline of financial support that the goal of
extending higher education opportunities for generations of Ugandans
will be realised.
Stephen Christian Kaheru works with the Association for the Advancement of Higher Education and Development (AHEAD) in Kampala.
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