THE Students' Loan Bureau (SLB) is ramping up measures to ensure that borrowers make good on their promise to repay loans, said Ananlisa Downes, the financial institution's public relations manager.
"Delinquency is extremely high, higher than we would like," Downes said.
The SLB is being forced to increase its loan collection efforts as many borrowers, some capable of repaying their loans, are choosing not to do so. These persons will have the institution's most stringent measure, litigation, brought against them.
Among the other measures that the SLB has been using are the publication of names and pictures of "bad" borrowers, the use of baliffs and debt collectors and requesting guarantors to service loans on which borrowers have defaulted. This last technique will become more central as the SLB moves to increase guarantors' responsibility for loans, she said. The use of debt collectors extends beyond Jamaica to other countries in attempting to collect money borrowed.
There are employed persons who refuse to pay, while using other financial institutions for loans to purchase homes and other acquisitions, said Downes, noting that the SLB is often low on the list of priorities for many of these people.
One measure that she believes will cause a significant shift in the mindset of persons who do not repay SLB loans is the creation of a credit bureau.
A credit bureau is an agency that researches and collects individual credit information and sells it for a fee to creditors so they can make a decision on granting loans. A credit bureau does not decide whether an individual qualifies for credit or not, it only collects information that it considers relevant to a person's credit history and habits.
Earlier this year, Finance Minister Audley Shaw said he was optimistic at the possibility of at least one credit bureau starting by the end of the fiscal year.
Shaw also said that he had received three applications from interested persons to start credit bureaus, following the passing of the Credit Reporting Act in mid-2010.
Downes said that once persons realise that not paying back loans will impact their credit rating and their ability to transact business without hindrance, they will be forced to repay or possibly be prevented from conducting business elsewhere.
The SLB had taken a softer approach earlier this year by giving an amnesty to borrowers with loans that were over 10 years old or in arrears. The amnesty, which lasted from March to August, completely waived late fees and a percentage of the insurance and interest due. Over 800 delinquent borrowers took advantage of the opportunity, allowing the SLB to collect $100m of the estimated $1 billion that it was owed.
Another amnesty was not being considered now and it was time to get tough on the persons who still neglected to repay, she said.
Currently, students are given 10 years to pay back loans at nine per cent interest after it was reduced from 12 per cent earlier this year. The SLB is also awaiting the determinations of an actuarial review to see if it can lengthen the repayment period to 15 years and further lower interest rates.