Only 1.5% repaying gov’t student loans as applicant numbers rise

Kampala, Uganda | THE INDEPENDENT | Many students are rushing to apply for government loans to pay for their university education but hardly any are paying back the money.

It transpires that only 1.5% have been servicing their loan, long after they graduated and started working. The Higher Education Students Financing Board is now worried over the ridiculously low number of beneficiaries who are repaying the money yet younger Ugandans also need to take loans from the same fund.

Launched in 2014/2015 academic year, the program targeted students who wanted to pursue a degree and undergraduate diploma courses in Science, Technology, Engineering and Math (STEM) programs but are unable to raise the necessary financing.

Available statistics indicate that over 4,000 students have already completed their studies in different disciplines where the government spent over 25 billion shillings with a big number of them expected to have started servicing their respective loans.

However, Michael Wanyama, the executive director of the scheme says that only 63 students have been repaying the money. Wanyama adds that out of the 63 students, 13 have fully completed their loans even before the allocated grace period while 50 are still servicing the loans.

Wanyama notes that when a beneficiary is unable to meet the set target, he or she is expected to give the board an update every after three months so as to enable the board to reschedule their loan repayment. He however adds that upon finishing studies, many students cut contact with the board.

According to the Higher Education Students Financing Board, prior to loan agreements with the beneficiaries, one is given a grace period of one year after completing studies but thereafter, he or she must share with the board his repayment plan.

The loan repayment period is always set between three to eleven years. During the repayment, the law stipulates that the scheme collects money not exceeding 30 percent of one’s earning.

The State Minister for Higher Education Dr. John Chrysostom Muyingo notes that defaulting the loan might hinder the government’s ability to finance or increase allocation to the scheme which had been designed for a revolving nature where the recovered money would be financing new beneficiaries.

There is a negative culture in Uganda for people benefiting from government lending programs to abscond and many times the government has lost huge sums of money. In 2017, Dr. Robert Kyaligonza from the East African school of higher education at Makerere University published a study arguing that the schemes current mechanism of repayment was already weak and needed to be strengthened.

For instance, he argued that the program needs to have a collection agency that is viewed as professional, incorruptible, and technically competent and able to keep track of the borrowers whereabouts.

Meanwhile, this year the scheme has set aside 4.5 billion shillings to extended loans to 1,113 students. However, this is just 20 percent of the total number of students that had applied for the loan for the coming academic year.

Wanyama notes that over the years, the number of students requesting from the fund has steadily increased thus calling for additional funding to enable them to take up more students. He also adds that additional funding will enable them to extend their loans to continuing students, postgraduates, and also those pursuing courses in humanities.

The student loan scheme exists in many developed and developing countries financed by either public funds or backed by government guarantees. In Uganda, the scheme was one of the many recommendations of the government white paper of 1992 looked at as one of the best ways to ensure equitable access to higher education.

Since its inception, the scheme has benefited 11,145 students. Among them are 3,000 health practitioners, 2,000 science teachers, 3,000 in engineering disciplines, and 800 in the field of agriculture among other areas.

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