COMMENT: Developing skilled human capital

Selection process

The Student Loan Scheme is managed by a Board of nine members drawn from key primary stakeholders in the education sector. These are women and men of proven integrity who work tirelessly and have committed their time and efforts at very meagre rewards to carry out the Board activities. They deserve an accolade by all Ugandans. They have ensured that the most deserving needy students are the ones that get loans. They are aware that the selection process of the beneficiaries is a critical factor in the success of the loan scheme and in line with the law that establishes the Scheme, the Board in approving the successful loan applicants takes into consideration the regional balance, gender, social economic status and equity.

All Ugandan citizens who are admitted at tertiary institutions and have difficulties in raising funds are eligible to apply. All applicants are subjected to a uniform scorecard that considers proxy indicators to arrive at a lending decision (means test).  The proxy indicators have been factored into the ICT software that awards the score and, therefore, there is no human interference in awarding the marks.

The Board has, therefore, awarded loans to the most deserving loan applicants who are the neediest among the applicants. Other factors considered are: An applicant must be a Ugandan, is admitted for an accredited course or programme of study, is admitted in an accredited (Chartered) Institution of Higher Learning, and must have applied for a loan.

So far, over the three year existence the loan scheme, the Board has received 10,545 applications. This is an indication that a sizeable segment of the population cannot afford education costs at tertiary institutions. It is also true that Government cannot solely finance higher education with a population of over 157,000 students in Higher learning Institutions.

On the other hand, with the increase of population and number of students completing advanced secondary education, it has become a burden for the government to provide free quality education, and hence the introduction of cost-sharing. It is apparent that the cost cannot be borne by many parents because of poverty. It should be noted that with the increasing population and the competing demands on the government coffers, the Board is not yet in position to fund all those who apply for the loans. The Board, however, applauds the Government and especially the Minister of Education and Sports who is very committed to secure more funding to increase on the number of beneficiaries. Government so far is on the right track to fund the needy students and has promised to plough funds into the scheme. This is a good step in ensuring sustainability of the scheme and will enable many disadvantaged students to access higher education.

The Board on the other hand is playing its role fully cognisant of the challenges ahead. It is putting up a robust ICT infrastructure that helps in loan application, loan award and disbursement, and database management among others. The loan applicants can now apply online and are also scored using the ICT scorecard. The beneficiaries are listed on the Credit Reference Bureau for information sharing. This will enable the Board to blacklist defaulters which shall serve as a deterrent to beneficiaries who are able to repay the loan but neglect to do so. Loan beneficiaries also pay a loan protection fee of 1% on the gross approved loan amount and the purpose is to indemnify the borrower against payment of outstanding debt as a result of death or permanent disability.  This is one of the strategies to ensure that funds are not lost through death of loanees.

The student loan scheme is an assured great source of funding to universities, both Public and Private (Chartered universities). The fees for the beneficiaries is normally remitted in a lump sum and therefore the tertiary Institutions no longer have to chase after fees defaulters. With the increase in the number of students being supported, Universities will have a more reliable source of funding to meet their wage and nonwage and development expenditures.

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Michael Wanyama is the Executive Director of the Higher Education Students Financing Board