FACED with a delinquency rate of 30 per cent of its overall portfolio, the Students’ Loan Bureau (SLB) has made recommendations for mandatory loan repayments to be legislated.

Executive director of the SLB, Monica Brown, said the Ministry of Finance and Planning would be making the submission to Cabinet, given the fact that the current legislation does not mandate the repayment of student loans.

“Once you have the force of law then it supports what we do. Right now, they (beneficiaries) sign an agreement and a number of them can walk away from their agreement without honouring it and once there is the strength of law, then you are able to garnish wages without going through the court system. So that, we feel, will help in a significant way in encouraging persons to pay,” Brown told reporters and editors yesterday during the weekly Jamaica Observer Monday Exchange at the newspaper’s Beechwood Avenue head office.

For someone to be considered a delinquent they would have to be 90 days or more in arrears. In addition to the increasing unemployment rate in the country, Brown feels an existing culture of entitlement is part of the reasons for the high rate of delinquency.

“There are a lot of persons who borrow funds from the SLB and at the end of the day, they graduate, they are in very lucrative jobs, but they feel that they don’t have a duty to repay because it is government’s money and therefore it is free, and we really need to disabuse SLB beneficiaries of that, because if they do not repay the loans, then there are other persons who are in need who will be denied an opportunity,” she said.

The SLB was established in 1970 under the Students’ Loan Fund Act and operates a revolving fund which assists with financing tuition for tertiary level students. The loans are unsecured and payment is generally not required until after the completion of studies, although beneficiaries are often encouraged to start paying during the moratorium period to reduce the burden of payment later.

Beneficiaries pay a nine per cent interest rate, which represents a 25 per cent reduction from the 12 per cent that was required prior to April 2011.

“What we have been doing is inviting persons to come in and speak with us where they have difficulties in starting the repayment of their loans, because we know that sometimes there are challenges in terms of ability to pay shortly after graduation,” Brown explained.

The SLB has introduced several initiatives over the years to reduce delinquency. One of the most recent efforts is the “Every dollar counts” campaign, which is geared towards encouraging beneficiaries to speak with representatives at the bureau to see how best they can make the monthly repayment more affordable.

“Come in and speak to us and let us know what your situation is, because there have been a number of persons who have written and called to say, ‘Okay, I am not working, my monthly payment is $10,000, but I can pay $2,000 or $3,000’. We invite those persons to come in and make some sort of arrangement because… every dollar counts and every dollar goes towards us being able to assist someone else in attaining their tertiary level education,” the SLB’s Public Relations Officer Analisa Allen noted.

The bureau believes that this focus on getting beneficiaries to pay is part of the reason for an increase in loan collection from $75 million per month in 2011 to $105 million per month now. The collection of money, Brown notes, is very important if the bureau is to continue to help finance the tertiary education of the thousands of students who rely on it for assistance every year.

“Over time, the growth in delinquency which we are trying to curb, if it is not reduced, then it will threaten the survival of the fund,” she pointed out.

“We implore our beneficiaries to take responsibility for their tertiary education and for their borrowing. At the end of the day, they would have benefited in the investment in their education,” she said.

Meanwhile, Allen is optimistic that the establishment of local credit bureaus will be a positive thing for the SLB.

“Once the credit bureaus are fully up and running and people are able to pull down credit reports and that sort of thing, we look to the fact that persons will not necessarily want this debt burden on their credit score, which will prevent them from accessing loans for all kinds of other things — houses, cars, furniture and that sort of thing,” she said.