College grads face uphill battle with student loans

BY PAUL ALLEN Business Reporter allenp@jamaicaobserver.com

Sunday, January 15, 2012

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MANY university graduates are still feeling the pinch to repay loans despite efforts by the Students' Loan Bureau (SLB) to ease the pressure.


"I've been out of school for the past six months. That's basically the time most, if not all, get when they complete studies (in June) to the point when they are expected to start repaying their loan in January of the following year," said a graduate of the University of the West Indies.


"Having studied media and communication, I knew exactly what I wanted to do and where I saw myself being in the next five years. However, you realise how idyllic that is once you've been chucked out into the world where nothing is ideal," she said. "I hate to generalise, but it's unlikely that most of us who graduate will find a good-paying job off the bat; I certainly didn't. To make decent money, they (employers) want experience. They won't hire you without it, they won't hire you to get it but they sure do want it."


The SLB Council recently approved an amendment that allows for loans given by the financial institution, starting for the academic year 2012/2013, to have their standard repayment period extended from 10 (including the years spent in university) to 15 years. This was "to ease the financial burden on beneficiaries and to encourage increased repayment", the institution's website stated.


Additionally, SLB noted that the loan tenure will be extended to a maximum of 20 years for persons who read for degrees in programmes that exceed the general three to four year duration and attract higher tuition costs. These include medicine and law.


"For existing loans, the extension in tenure will be applied on a case by case basis as requested by the beneficiary," the institution added.


The UWI graduate found little comfort in these changes, as she isn't eligible to benefit from the lengthened repayment period and doubts she will have her tenure extended when she makes the request later this month.


She studied production and broadcasting and has experience from working on several productions and serving an internship, but none have helped her to get a job that can repay her student loan and pay the monthly bills.


"It's incredibly frustrating and I don't want to owe anyone, so I am going to make an effort to ensure that I meet those obligations come month- end. The worst part is thinking about how long you will have to make those payments, which are constant, and take care of other bills which are seemingly always on the increase."


"I'm more fortunate than some though," she said. "I recognised early on that I would have problems repaying (the SLB), so I started treating my salary as though I was making repayments and put aside that amount."


Using this strategy, she was able to save almost $100,000 during the half-year period before the loan repayments were to begin. She said she intends to pay off the loan's insurance and two months' instalments. The rest will be "my rainy-day fund for when I am unable to find all the money to give them. (Although) I'm not planning to be short with the payments as this will only have me pay more and increase the likelihood I'll fall behind on other months."


She will, however, benefit from last year's announcement that the SLB will be reducing its interest rate significantly, dropping from 12 to nine per cent. Also, the SLB had announced that "effective January 2012, the insurance charge on loans will be reduced to $0.60 per $1,000.00 of loan amounts. The amended policy allows for repayment insurance to be paid over the full repayment period of the loan, rather than the 24 months that previously obtained."


Taking all that into consideration, she is expected to pay back over a million dollars after borrowing $561,000.


"At a monthly rate of roughly $14,000 for seven years, it sounds good on paper," she said, "but when you consider that I'd only have to pay about $700,000 if I could do it all at once, it's somewhat depressing. That's almost half-a-million more. "


Another recent graduate, this one from the University of Technology, shared similar sentiments. "I know that it (the SLB) tries to assist students as best as it can and without them myself and thousands of others would perhaps have not made it this far. I'm extremely appreciative of all they did for me and continue to do for others, but as a nation, this can't be the best we can do," he said.


He said he has not saved towards paying off the loan but has every intention of giving more than the monthly obligations, and pay off the loan before the agreed time.



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