THE Students' Loan Bureau (SLB) boasts on its website that it normally provides about 88 per cent of the loans applied for by tertiary students annually, but information provided to Parliament yesterday suggests that the bureau might not even meet 50 per cent of that target this year, even with private sector support.
The SLB receives more than 6,000 applications yearly. SLB Chairman Tony Lewars, under intense questioning from members of Parliament's Public Administration and Appropriations Committee (PAAC) at Gordon House, admitted that the Bureau will need strong private sector support to achieve anything near the average figure. The Bureau confirmed that it was already in talks with the Jamaica Bankers Association.
Lewars said that while he was not extremely concerned about closing a $350-million gap for 2012/13 because the Ministry of Finance and Planning has undertaken to provide it, he has serious concerns about the $6.9 billion needed for 2013/14, as the Bureau's financing is almost nonexistent.
“I can also mention that the minister of education and the minister of finance have engaged the private sector to see to what extent they can play a more active role in financing students’ loans for tertiary education. But the truth is that we are talking big bucks and, at $6.9 billion, I am not sure that the private sector, with the best will in the world, will be able to provide that. So we are in a predicament,” Lewars said.
Executive Director Monica Brown explained that the SLB's insurance fund, which has been promoted as having a viability of 1,000 years at current revenues, is down to approximately $500,000, as $1.3 billion was borrowed to meet the $1.7 billion which was owed to tertiary institutions for the 2012/13 academic year.
“… So what remains in the fund now is a drop in the bucket compared to what we need to loan to the students,” Brown admitted. However, she said that for 2012/13, students whose applications have already been processed will not be deregistered, although the SLB still owes the educational institutions over $300 million of the $1.7 billion for the past academic year, which is to be paid by the Ministry of Finance and Planning.
This led PAAC member Mikael Phillips to comment that “when I heard the chairman saying that the fund is viable for 1,000 years, I thought you meant you had six or seven billion in the fund”.
“I thought you had billions in the fund, too,” acting PAAC chairman Marisa Dalrymple-Phillibert added.
Lewars said about $200 million flows into the fund annually, which meant that it can be safely ruled out for support in 2013/14.
The SLB team also admitted that outside of its annual revenue from outstanding loans of some $800 million, the only other source of funding is a $20-million loan expected from the Caribbean Development Bank (CDB), which is still awaiting approval of a government guarantee.
The CDB is also providing a US$175,000 grant to assist the bureau with its institutional strengthening, in order to address the current operational challenges and the enhancement of its long-term sustainability.