Use banks to handle students` loans, envoy advises

BabuK · 2012-03-31T20:34:16+00:00

Kenyan High Commissioner to Tanzania Mutinda Mutiso has advised the government to use bank institutions in managing students loans saying they have more skills and experience in borrowing and lending. He made the remarks yesterday in an exclusive interview with The Guardian during the official closure of the three-day National Conference on Education in Tanzania organised by the School of Education, University of Dar es Salaam. Mutiso said the approach will help to ensure that students provided with loans pay them timely. The best way to manage students loans is only to shift them from being administered by government bodies to bank institutions, Mutiso said. He however commended the government system of setting aside funds in every budget as loans to higher learning students. Another good thing in Tanzania is that they provide loans to all students regardless of whether they study in public or private universities, Mutiso said. Speaking on the Kenyan experience, Mutiso said his countrys new constitution has made access to information a fundamental right thus the loan defaulters could be traced through a system put in place to ensure they repay the money. This system is being used by banks and other government institutions and the person cannot be given employment if discovered that he was earlier employed and failed to repay the loan, he said. For those holding various post in the government, he said they can be suspended and their benefits used to pay the loans. Further, he said the experience by the Higher Education Students Loans Board shows that success in financing higher education lies in an integrated approach where all players in the higher education sub sector contribute to facilitating access to higher education. HESLB believes that students loan schemes are viable in Africa so long as they are well managed, he added. Mutiso said the ultimate solution would be to develop a model students loans bank to manage the issuance of long term loans for education purposes. The current set up is simply not sustainable in the long run and presumes political interference in management of debt. This would insulate the function of the loan scheme from political patronage and whim, he explained. On Wednesday Prime Minister Mizengo Pinda called upon education experts in the country to recommend better ways of financing students in higher learning institutions, saying the current system cannot be sustained. The Premier made the remarks when he officiated at the National Conference on Education in Tanzania. Pinda said the government currently faced the challenge of fast rising number of higher education students who need loans compared to its capacity to provide the same. He pointed out that the trend of repaying the loans has not been encouraging. A recent report by the Higher Education Students Loans Board said outstanding student loans stood at 811bn/- and that a major hunt for the defaulters was underway, enlisting assistance of the guarantors and local government leaders. Premier Pinda said the amount of loans needed by students has been growing over the years, pointing out that in 2004/2005 the government issued loans amounting to 9.9bn/- to 16,345 students, adding that the amount has increased to 148.5bn/- for 69,981 students in 2009/2010. It is obvious that the government budget will not sustainably afford to issue loans to every student every year. We need to hear from you if there is any sustainable means of financing students in higher learning institutions, Pinda said. SOURCE: THE GUARDIAN

Thread starter BabuK
Start date Mar 31, 2012

BabuK

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Use banks to handle students` loans, envoy advises

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