Former university students who have not yet repaid back their loans to the Higher Education Student’s Loans and Grants Board (HESLGB) risk paying the money with an interest and be deprived of obtaining passports, visa or driving licences.
This comes as a 12-month grace period for loan repayment ends in March 2017.
The board identified 30,000 students dating back to 1985, who owed government K3.8 billion. The Loans Board has only managed to trace 14, 500 of them.
Executive Director for HESLGB, Chris Chisoni, said the institution, effective March, will now calculate the amount at present value, and then accrue interest for the years the balance has been outstanding.
“The interest will of course be reasonable, not at a commercial rate. The board will meet in February to discuss the rates. The former students were given a grace period of 12 months and I feel we have given them enough time,” said Chisoni on the side-lines of a meeting between the Board and the media in Blantyre on Friday.
Director of Loans for HESLGB, Emma Tambala, said currently beneficiaries across several cohorts up to 2013 owe the Loans Board some K3.8 billion and only K35 million has been collected.
“After the deadline those that will not have paid will not be able to obtain a driving licence, passport, and a bank loan or visa to travel abroad. Those that have already obtained the said documents will not have a chance to renew them if they have not repaid the students’ loan,” she said.
Tambala added: “We are working together with Credit Reference Bureau which has a list of all names. [Already] 20 or so former students weren’t able to get a bank loan because they owe us. This is an indication that our cooperation with other sectors is working out.”
She said failure to repay student loans denies several others an opportunity of attaining higher education as the money is intended to be given out to needy and deserving students to pay for their university education.
Tambala emphasised that if an employer does not comply in helping their employees who have a loan to repay, they will pay a penalty of K1 million for each employee.
“The employers are supposed to help in the collection of the loans. Their engagement is embedded in the Act. They are supposed to know whether one has a loan or not at the time of interviews. We have already reached out to 700 employers. This includes government ministries, departments and agencies,” she said.
HESLGB was put in place by a Parliamentary Act no: 2 of 2015 to finance access to higher education of needy and deserving students in Malawi.
The Board’s mandate as per the Act is to disburse loans yearly to needy and deserving students pursuing higher education in government registered higher learning institutions (like National Council for Higher Education- NCHE) both public and private and are pursuing accredited programs and courses.
Its other mandate is to recover the former loans from former beneficiaries of the higher education loans scheme dating way back from 1985/86 academic calendar.
This is with an intention of making the Higher Education Students Loans and Grants Board financially viable to become a revolving fund that will sustain itself in the long run and support more needy and deserving students.
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