Thwaites proposes comprehensive approach to tertiary student financing
BY INGRID BROWN Associate editor - special assignment email@example.com
EDUCATION Minister Ronald Thwaites yesterday said there is need for a comprehensive approach to tertiary student financing as the Students' Loan Bureau (SLB) is unable to meet the demands from the number of new applications it has received this year.
The education minister, who was addressing the weekly Jamaica Observer Monday Exchange, said the SLB is yet to identify $1 billion of the $1.8-billion its needs to service the new loan applications received thus far.
He explained that of the approximately 15,000 applications received this year, 9,000 are returning students while 6,000 are new applicants.
"It is going to cost $2.8 billion to keep the 9,000 returning students and they (SLB) will need $1.8 billion to satisfy the demand for new loans and they only have $800 million, so we are $1 billion short," Thwaites said.
This shortfall comes even as the SLB has reported that collections have been better than in previous years, having collected $1.6 billion last year, some 20 per cent more than the year before.
"But even if they collected everything which was owed to them, which would be about $2.4 billion a year, they could barely meet that new student need, so they do need another source," Thwaites said.
He explained that the SLB has made an application to the HEART Trust to invest some of its reserve funds into the SLB as a revolving investment which would particularly be directed to those applicants who want to further qualify themselves in technical and vocational areas.
"The budget clearly cannot provide the difference, and in the circumstances of our arrangements with our creditors we can't go and borrow that money or run a fiscal deficit as in the past," Thwaites said.
The education minister said this year the SLB is concentrating on students who applied to pursue medicine, engineering, pharmacology, science, and maritime studies.
"But many of their applicants are in the mode of business studies and social sciences and they are not going to be favoured. I don't think many lawyers are going to be favoured this year either," the minister said.
He added further: "In what is effectively a triage situation it is no use saying every profession is as good as anyone else and if I feel like doing it I should have equal opportunity for finance, because we have to look and see how we can guide and articulate these things towards developmental goals."
The SLB, he said, is also now looking at offering qualified students the option of accessing loans without the long required need for a guarantor, which has often been a problem for many needy students.
However, even this new initiative might be constricted because of the overall shortage of loan capital.
"We are therefore seeing what resources can be made available from within the private and public sector to fill this gap," Thwaites said, even as he lauded companies like the Sandals resort chain and a number of foundations for offering assistance.
"I am hoping that some of the professional associations will step up to the plate like the lawyers, the doctors, because many of them have benefited from student loans and scholarships," he said.
Thwaites said they will be approaching the banks again to have them rethink how they can move some of the "tremendous liquidity that they have into the student loan arena".
"Suppose, for example, whatever HEART Trust might contribute to a revolving fund were treated not as a loan but as a loan guarantee, would that mean the banks could be more flexible in terms of what they were able to credit or advance, at what rate and at what period of time?" the minister questioned.
Despite the constraints, Thwaites said the SLB is trying its best to cover all the bases with the anticipated demand.
"The change of attitude towards tertiary education, the breath of possibilities and the hope of being able to satisfy as many as possible may be elusive this year, but I think we are moving to a better place," he said.
In light of the challenges, Thwaites said there is a deeper issue of how tertiary education is funded as it is estimated that last year, some 3,000 students could either not find a benefactor to help them with their fees and neither could they approach the SLB because they did not have a guarantor or other collateral.
This, he said, is a huge loss to the country and the individuals.
"We spent a year or more meeting with the leaders of all the financial institutions. It is a supreme irony that it is easier to get a loan to buy a Japanese car, which requires foreign exchange... but you have to mortgage your grandmother's eye teeth to get a loan to pay a year's tuition," he pointed out.