Jul 24, 2016 News
With the revelations of the extent to which past University of Guyana (UG) students defaulted on their obligations to repay their student loans, a number of proposals have been put forward by a Sub-Committee that is reviewing the matter.
And according to Junior Minister of Finance, Jaipaul Sharma, the recommendations feature a number of bold, tough measures designed to stem the rate of defaulters. Among the measures, are proposals to boost the Student Loan Agency (SLA) with legal personnel.
Sharma said that there were recommendations for stricter monitoring of the loan agency and for the agency to ensure that persons are given letters of warning when they are in default.
Public Relations Officer of the Ministry of Finance, Wanita Huburn, had announced that a sub-committee had been set up to oversee matters of loan recovery. She had explained that through the sub-committee, efforts are being made to improve the overall system and infrastructure of the Agency.
Sharma noted that while previous students signed contracts stipulating the conditions under which they would pay back, these contracts were not enforced. However, Sharma stated that one avenue is for the Student Loan Agency to submit monthly reports to the sub-committee he chairs.
“(They) will now have to report to (the) committee, comprising myself as chairperson, the finance secretary and other persons,” the Minister said. “So this committee will ensure that (the agency) monitors the records.”
“Monthly reports will be submitted to the committee (detailing) how (the loan portfolio is) performing, who are paying and who are not paying and then advise our legal (personnel so) that they are going to take action. That should be a motivating factor.”
“We are going to be looking at the contract that they sign. You sign a contract which says you have to pay monthly. And if you skip two months, (we) give you a warning. If six months, we say we have to send it to our lawyers. I would even say we are going to prosecute.”
With these measures in mind, Sharma stated that they will now have to strengthen the loan agency with legal personnel, since the contracts students are signing are legally binding.
Sharma said that they will be looking at internal measures and working along with the student agency in order to make it more efficient.
He said that with the changes to be made, no one staff member will be able to take a decision to send or not send a letter of warning to a defaulting student.
A forensic audit into UG’s SLA had revealed that from 1994 to May 2015, some 17,567 or 69.4% of 25,335 student loans were deemed delinquent because students were not honouring their debts.
The audit report contained the names of some 488 persons who were deemed “delinquent” in the loans. The list included the names of prominent Guyanese professionals and politicians. Judging from the fact that these debts span over a decade Sharma, a public accountant, described such debts as bad debts.
“The only way is to find some inducement to get them to pay,” he said. “We have a number of proposals on the table. Maybe one of them is to give them an amnesty period of six months. Maybe (we could) say if you pay off all the money, you could get a reduction of the interest.”
“The previous administration never looked at it and it was all bad debt. And that is a lot of money. We are trying to recover that money so whatever we gain will be a part of recollection. So we are looking at the effects of the losses.”
It was announced last Thursday during a post Cabinet press briefing that Cabinet is now in possession of a report that has the workings of a Parliamentary Sub-Committee which recommended several steps to be taken to enable the agency to recover loan balances.
This was revealed by the Minister of Natural Resources and the Environment, Raphael Trotman. He had stated that the Sub-Committee recommended a review of the organizational structure and business processes of the agency, to make it compliant with auditing and accounting frameworks.
He added that included in the report also, were a number of recommendations for short and medium term measures to streamline the agency and to set “clear” conditions for loan applications.
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