INDIVIDUALS borrowing from the Students’ Loan Bureau are set to benefit from several improved loan options, including a 25 per cent reduction in interest rates, minister of finance and the public service Audley Shaw has announced.

The changes, which became effective on April 1, will see the interest rate moving from 12 per cent add-on to nine per cent and the lengthening of the repayment period from 10 to 15 years.

“By September of this year we will review that rate again and make sure it is not add-on but reducing balance,” Shaw announced at Gordon House in Kingston yesterday during his opening presentation to the 2010/2011 Budget Debate.

He said that the policy was part of several interim measures being implemented, pending the results of an actuarial review now in progress. The bureau, he said, is in the process of implementing a new sustainable, long-term model that will provide more affordable financing to students.

Borrowers are also to benefit from a reduction in insurance premiums from $1.50 per $1,000, to $1.00 per $1,000.

“This is significant as in some instances the insurance cost represents over 40 per cent of the total monthly payment. So, for example, a person who borrows $500,000 for a period of study, the interest saving on this policy change would be $195,000. But more importantly, the monthly payment would move from $9,200 per month to $5,000 per month — a reduction of 45 per cent,” the finance minister said to applause from his colleagues.

Shaw also paid tribute to the dynamism of the bureau’s board and Executive Director Monica Brown who were brought in during the 2010/11 fiscal year.

He said notwithstanding previous challenges, the bureau increased its disbursements by 15 per cent or took on some 1,300 new loans during that period.

In the meantime, Shaw said the PetroCaribe Fund will make available a total of $28.5 billion in loan financing to central government and self-financing public bodies. He said the SLB will benefit from the fund through the establishment of a sustainable long-term model at the bureau to provide low-cost financing for tertiary-level students.

“By the end of August this year, I should be in a position to outline the revised arrangements which will come into effect during the 2011/12 school year,” Shaw said.