THE Planning Institute of Jamaica (PIOJ) is exploring the possibility of obtaining international funding to finance concessionary loans for needy students, through the Student's Loan Bureau (SLB).
The special concessionary loans could reduce the interest rates paid by beneficiaries from 12 per cent to as low as four per cent, but with the condition that the students take on specified studies limited to areas which are short of qualified personnel.
This was disclosed in the first half-yearly report from Parliament's Public Administration and Appropriations Committee (PAAC), to be tabled in the House of Representatives for debate.
The tabling of the report is in keeping with a commitment from Minister of Finance and Planning Dr Peter Phillips in his budget presentation in May to increase the role of the PAAC in monitoring the performance of Government ministries, department and agencies in relation to the medium term economic targets and fiscal responsibility.
The introduction of the concessionary loans for training in the specified areas would fulfill a commitment made by former Prime Minister Bruce Golding in 2009, for the SLB to offer loans at vastly reduced interest rates for students willing to take up studies in areas where there were shortages of trained of personnel in Jamaica.
The PAAC has done extensive examination of the SLB since the tabling of the second supplementary estimates in February, which showed that the Bureau had saved $80 million, which members felt should have been used to assist "needy tertiary students".
The committee summoned representatives of the SLB to three meetings since then to explain the non-expenditure. At the first meeting in March, the SLB revealed that in 2009 it had received $125 million from the Ministry of Finance for grants, but disbursed only $39 million of the amount. The committee was also advised that a request was made in May 2010 for approval to transfer the balance from grant funds to the revolving loan pool, but there was no response from the Finance Ministry and the funds were left in the grant pool and carried forward each year since.
The committee was told that there was a means test for determining whether a loan applicant was in need of a grant, and that the test was being reviewed.
The committee said that having considered the matter, it found that some students could not benefit from the grants, because they had no guarantors and therefore could not apply for loans. The committee recommended that the grant policy be reviewed and asked the SLB to return to give an update.
The SLB representatives returned in April and told the committee that following discussions with the Ministry of Labour and Social Security they had sought assistance from the Planning Institute of Jamaica (PIOJ) to revise the means test. They found that the Beneficiary Identification System developed by the PIOJ, was better at identifying the students in need of grants.
The PAAC advised the SLB of the decision announced by former Prime Minister Golding in 2009, for special concessions for students pursuing studies in specified areas where there was a lack of trained personnel, which would reduce the interest rates on loans to students pursuing studies in these areas from 12 per cent to four per cent.
The committee recommended that steps be taken to ensure that the policy was implemented, and the SLB was instructed to conduct a study on the skill sets needs of the country.
The SLB wrote the PAAC in mid-August advising that following a meeting with the PIOJ, the Ministry of Labour and Social Security and the HEART Trust/NTA to consider introducing incentivised loans for students pursuing specific disciplines, and prioritised loans based on the skill sets needs of the country, the terms of reference and deliverables for the study have been drafted and the PIOJ is exploring the possibility of sourcing funding from an international agency.
The sustainability of the revolving loan fund came up at the third appearance of the SLB in early October when the representatives informed the committee of a $2.5 billion shortfall in meeting the $4.2 billion needed to for disbursement to tertiary institutions. The committee has recommended a policy review of tertiary funding of education in Jamaica, and that the Government explore the possibility of obtaining financing from multilateral institutions.
Regarding the concerns about the SLB borrowing from its insurance fund to finance its needs, the committee noted information from the SLB that the actuarial review had indicated that, based on the minimal claims on the fund, the risk was low.