DESPITE the announcement by Finance Minister Dr Nigel Clarke in his recent budget debate presentation that Students' Loan Bureau (SLB) applicants will now only need one guarantor instead of two, current borrowers are more concerned with what they call the high 9.5 per cent interest rate on their loans.
A number of borrowers are pleading with the bureau to reduce the interest rate for the loans. They believe that the interest rate is too high and it poses a problem when they should repay the monies owed.
University of the West Indies (UWI) graduate, Ralesha Williams, said that while she is currently paying back the loan and in good standing, it has been a very hard road, and she blamed her difficulties of the interest rate applied.
“It would be nice to have a seven per cent [interest rate],” Williams told the Jamaica Observer. She said that she was in a “financial situation” and was unable to repay the loan, which she said put a lot of pressure on her. “This is a recent occurrence that made me feel burdened by the loan. [My] guarantors are also indebted to the country because of my loan. Certain businesses they want to do, they are unable to do so because they owe SLB. Recently one of my guarantors had to pay a lump sum to clear her name. So now I am repaying that person and also my regular loan amount each month,” she explained.
Graduate of the University of Technology (UTech) Lashaun Pryce also believes the interest rate is too high and that he regretted taking the loan.
“I started paying my loan as soon as I finished [UTech]. It was a burden because [the loan payment] was at 12,000 a month and I was only working 40, 000 a month and my lunch money and bus fare came up to 20,000 for the month. I was just working just to pay back the student loan,” said Pryce.
Another UTech graduate, Donrossi Simpson, said that along with the interest rate being too high for borrowers to make payments, “people bruk and though a few jobs are here, they do not pay enough to allow room for borrowers to survive, plus make payments”.
Added Simpson: “The interest can be lower to ensure graduates are able to afford the loan amount. Considering the contraction in the workforce and the below-market salary payment, it is difficult for individuals to meet loan amounts on a monthly basis.”
A Northern Caribbean University (NCU) graduate, who wanted to be identified only by the alias “Petagaye”, said, “from personal experience I can say there is no empathy when it comes to collections. I got sick and couldn't work for a while. When I tried reaching out [to] the SLB to let them know I would be missing a few payments, there was no response, and as soon as the money stopped coming I was sent an e-mail advising my account is going to be sent to the legal department and my photo placed in the papers.”
She continued: “[The interest rate] is too high, especially since it can be quite difficult to get a good job out of school. Also, the interest is not on the reducing balance but the principal, so it seems as it will never end especially when, like me, one is dumb enough to take it for the four years of college.”
University of the West Indies Guild President Sujae Boswell was in agreement with these SLB borrowers. Boswell said the 9.5 per cent interest rate is high, given the type of loan that it is and the purpose of the loan itself. “With Government seeking to reduce funding to tertiary institutions and redirect funds to the Students' Loan Bureau, the interest rates need to be far more favourable to students seeking access to higher education,” said Boswell.
He went on to say that while he welcomed news in the budget debate from Minister Clarke that the SLB will now only require one guarantor for applications, as he believes this will make access to loans easier to achieve and is a forward step for students, the 9.5 per cent could be lowered to possibly six per cent as a measure to increase compliance, especially in an environment where jobs are not immediately accessible upon completion of degrees.
According to the SLB, more than 10,000 students apply for loans annually and an average of 99 per cent of these applications are successful in accessing a loan.