I am very pleased to be on these hallowed grounds of my alma mater, the place where it all began, culminating in the position I hold today, that of the Minister of Finance- a position not without its fair share of headaches and heartaches but, equally, rewarding. Rewarding in the sense that it gives me pleasure when I can be part of something that is aimed at improving the lives of Guyanese. This is what this Government, your Government that you elected over a year ago, is committed to doing.
Today’s occasion is a simple, yet important, one in the life of students and the University. Today, we meet to officially declare open this spanking new building, the new home of the Student Loan Agency.
As we all know, the Agency has been temporarily housed, since 1994 – when fee-paying at the University was re-introduced – in a building provided by the University. By way of a bit of history, that building previously housed the project office of Sub Component A of the Human Resources training and Development Loan, which was financed by the IDB to the tune of US$14.4 million, with counterpart financing of US$1.6 million being provided by the Government. The University of Guyana got the bulk of the resources, over US$11 million.
That building served its purpose. However, after 22 years of occupation by the Student Loan Agency, the attendant wear and tear, which was unmatched by the necessary maintenance, has taken its toll. In addition, the need to adequately service a growing student population in a comfortable, friendlier, more inviting atmosphere became an imperative whose time could no longer be postponed.
And so, if my memory serves me right, in or around the third quarter of last year, after a meeting with the then UGSS President – I believe his name was Mr. Griffith – who pleaded with me for the Government to do something about the Student Loan Agency, I pledged to provide a new building. I had a conversation with the then Vice Chancellor, Professor Opadeyi, who was immediately receptive to making available, a piece of land for the construction of the building. I then instructed the then Chief Planning Officer, Clyde Roopchand – who has since deceased – to assemble a team to bring the project to fruition. Overseen by a young engineer of the Ministry of Finance, Mahendra Vanbrook, the project has been finally realised.
Not only will the staff be housed in more habitable premises but the students, past and present, and other users of the services of the Agency could be assured of a more pleasant atmosphere. I ask that the building be used for the purposes intended, and that due care is taken to preserve the edifice for many years.
This building cost the Government $26.5 million to build and furnish. this taxpayers money well-spent because we see it as an investment that is principally aimed at benefitting the students attending this University. But this investment pales in comparison to the investment the Government has been making in students since the inception of the Student Loan Agency. I am speaking of the $9.5 billion that the Government has made available to the Agency, since 1994, so that students could obtain the financing to pay for their tuition at this University. The following statistics may help to give some perspective in this matter:
The following is a summary of loans issued and the state of repayment:
Number of loans issued 26,239
Value of loans issued $9.5B
Repayments as at 2016-05-31 $1.75B
Installments due as 2016-05-31 $5.7B
Repayments as a % of Installments due 31%
Principal repaid $1.075B
Principal due as at 2016-05-31 $3.4B
Principal repaid as a % of Principal due 31%
Number of loans repaid 2,016
Number of loans that are up to date in payment 1,331
Number of delinquent loans 18,344
Number of persons with multiple loans 2,546
Repayment Funds – BOG Account 0164100413001(#1004) $1.79B
General Funds – BOG Account 01641004130 (#993) $0.22B
Following concerns about the high delinquency rate of borrowers of the Student Loan Agency (SLA), an audit into its operations was commissioned and submitted to Cabinet for a review.
The report, which was prepared by H. L. B. R. Seebarran and Company, identified a number of deficiencies in the SLA and made several recommendations to improve its operational efficiency and the rate of collection of outstanding loans.
Cabinet undertook a preliminary review of the report before remitting it to a Cabinet sub-committee for further examination and recommendations.
There were wide ranging discussions on the SLA’s operations, its loan portfolio performance, debt collection and recovery, and organizational development, including technological development and capacity building.
The Committee agreed that there was need to review the organizational structure, so as to ensure that there is adequate balance between the workload and staffing and the business processes, in order to ensure that operations are in compliance with auditing and accounting frameworks.
We also agreed after that documents and records were being improperly stored, that there are problems in accessing the database.
We also learnt that the application used by the SLA was archaic; indeed, so was the physical computer infrastructure. This of course, reinforced the need for proper document management and information technology systems.
So the commissioning of this building today is certainly a very firm step in the direction of recalibrating the SLA so that it can be more efficient and effective in its mandate.
It was also recognized that the Committee should provide some catalyst for borrowers to repay their loans.
I am, therefore, happy to announce that in this Jubilee year, the Ministry of Finance will give a Jubilee offer to borrowers by way of the following:
- A 75 percent reduction in the accumulated arrears of interest, if borrowers clear their indebtedness no later than August 31, 2016
- A 50 percent reduction in the accumulated arrears of interest, if borrowers bring their accounts up-to-date by September 30, 2016. If, however, a borrower defaults, subsequently, the interest so waived will be restored to the borrower’s account.
And in keeping with the mandate to strengthen the work of the Agency, there will be some immediate changes to the status quo:
- Loans will be given only to Guyanese students resident in Guyana for one hundred and eighty days continuously within a calendar year. Student borrowers must be holders of valid Guyana passports.
- There will be new requirements for borrowers who wish to switch from one programme to another. Such borrowers must now pay off the full sum of all outstanding loans before accessing a new loan.
- Letters of Notifications are to be sent to borrowers informing them of their loan balances. These will be sent one month after the loan is issued. In the event of a failure to respond positively by the borrowers, after a reasonable period has elapsed following a demand for payment, the Government will exercise all options to recover the debt, including litigation.
- Where students cannot be located or have failed to respond to written and oral communication, the SLA will send notification to the guarantors.
- As part of the strengthened screening process, guarantors will now be required to produce Liability Statements and/or credit reports from the Credit Bureau. The current forms will be reformatted to include an option to change guarantors.
- Students will now be required to start repayment on or before the one year grace period, once they have secured employment.
Consideration be given to a scheme wherein a borrower who serves continuously for five years after graduation, in designated areas away from his/her normal place of resident (for example, a borrower normally resident in Region 4 serving in Regions 1, 2, 7, 8, 9, or 10) can have the entire balance of his/her loan at the end of the five year period written off.
The Government has been fulfilling its obligation to provide funds so that students can access loans to finance their education. Students have an equal obligation to repay those funds upon completion of their University education and in keeping with the terms and conditions of their contracts. Otherwise, a Fund that is meant to be revolving, would soon dry up, and future students will be denied an opportunity to fulfill their dreams. The selfish attitude of many borrowers who are in a position to pay, but who refuse to honor their obligations, must not be allowed to derail the Scheme. In putting in these measures, we do not want to make life hard or difficult for any student. But, we would be irresponsible, nay derelict in our duty as a Government, if we allow hard-earned tax payers money to be frittered away in high delinquent rates and low recovery ratios.
Earlier, I spoke to you about loan that was extended by the IDB for education development. That loan had two other Subcomponents, B & C, one of which was targeted to assisting eligible persons to pursue postgraduate training overseas. That in essence was the first Student Revolving Loan Fund. But, sad to say, it never revolved because the borrowers did not repay their loans. History is repeating itself at a higher level. Luckily, the indifference paid in the past to managing the Student Loan Agency and collecting past due debts has been arrested. With these new measures, we hope that both current, past and future students will develop a culture of honoring their obligations. For what is a nation, whose soul is populated by the recalcitrant and the disinterested.