Students who benefitted from grants and loans offered by the Higher Education Students’ Loans and Grants Board (HESLGB) but are yet to repay the same should brace for tough times ahead, as the board is, in January, set to increase the interest rate on loan repayment from 10 percent to 15 percent per annum, The Daily Times has learned.
HESLGB Director of Recovery Paul Padambo justified the move in an interview, saying the current economic situation has necessitated such a move.
He also bemoaned that former students who are holding on to money are denying deserving students an opportunity to benefit from loans.
Padambo said this is the reason, come January next year, every outstanding loan balance will be charged at 15 percent interest rate per annum.
The director of recovery, therefore, asked those that owe the board money to repay before January 1 2023 for them to be charged at the prevailing rate of 10 percent.
“We still have a lot of outstanding loans that need to be recovered. We are currently at between K12 billion and K15 billion, in terms of money that is due for recovery. As such, you can see that the amount is substantial,” Padambo said.
He, however, said, apart from struggling to recover about K15 billion from former beneficiaries who are now working in public and private institutions, there are some positives registered.
“We have registered tremendous progress in loan recovery this year.
“However, some of the beneficiaries of the loans, now working in various institutions, are not committed to paying back the money. That money can help us reach out to other needy students,” Padambo said.
Meanwhile, The Daily Times has learned that ex-students who are clinging to HESLGB money are doing so when some students have been dropping out of school, most of whom due to lack of fees.
For instance, as the country is struggling to increase the number of students accessing tertiary education services, 2,154 students dropped out of school in the 2021-22 academic year.
This is according to the 2022 Malawi Education Statistics Report released by the Ministry of Education.
The report indicates that, out of the 2,154 students, 1,264 dropped out due to lack of school fees, representing 59 percent of the dropout rate.
The report, which Secretary for Education Chikondano Mussa and Minister of Education Agnes NyaLonje signed, further indicates that universities enrolled 56, 624 students in the year in question.
“As regards to proprietorship, about 66 percent of those who drop out of school in public institutions are male students, and they do so because of lack of school fees, while in private institutions, more than half [of] female students drop out of school because of school fees,” the report reads.
The ministry says it also intends to double enrolment figures over the next five to 10 years, citing the provision of loans through HESLGB as one of the mechanisms for achieving that goal.
Meanwhile, the Civil Society Education Coalition (Csec) has called on the need to improve on fiscal discipline in the management of loans so that more students can benefit from the initiative.
Csec Executive Director Benedicto Kondowe also said doing so would strengthen the loans board’s loan recovery mechanisms.
“You cannot just be disbursing funds without recovering any money because the whole idea of introducing loans was to transform it into a revolving fund, something that seems not to be working,” Kondowe said.
The quality education advocate also emphasised the need for private sector players to join in the cause of assisting needy students, citing the provision of scholarships, among other mechanisms.
Youth and Society Executive Director Charles Kajoloweka concurred.
“Apart from encouraging people to pay back loans, the corporate world can join the efforts by investing in the education of students who are struggling to pay fees in universities and colleges,” he said.
For the past two years, the board has been announcing that it may resort to naming and shaming defaulters and prosecuting them as one way of recovering the money.