Consider loan recovery plans before hand
Oct 20, 2009
FROM THE EDITOR<br><br>The introduction of the student loan scheme is a welcome idea, but must be well thought out before implementation. The proposal comes at a time when the cost of university education is skyrocketing, with universities being critici
FROM THE EDITOR
The introduction of the student loan scheme is a welcome idea, but must be well thought out before implementation. The proposal comes at a time when the cost of university education is skyrocketing, with universities being criticised for producing more job seekers than job creators.
One of the greatest bottlenecks experienced in many countries adopting the scheme is high default rates.
The education ministry needs to understand that irrespective of who receives the loan and at what interest rates, it has to be paid back. If this scheme targets brilliant needy students, then the Government should think twice before criminalising loan default. It is important to put into account that students cannot repay the loans without a source of income.
Issuing a list of stiff penalties to deal with loan defaulters who lack a source of income to repay the loans might bar potential beneficiaries from the scheme.
Joblessness is one of the greatest challenges that beset Ugandan graduates. The problem has led to brain drain in which Uganda loses a large number of its professionals to other countries. In 2000 alone, one in five Ugandans who completed tertiary education, or 21.6%, left for greener pastures, according to the report of the United Nations Conference on Trade and Development. Without an effective mechanism to track down graduate beneficiaries and in the absence of employment opportunities, the Government risks losing billions of loan funds in brain drain.
In a country where corruption is almost institutionalised, it would be challenging to ensure that the loans only go to the most deserving beneficiaries.
Awarding loans based on merit might also sideline brilliant students who go through less privileged schools.
Whichever direction the scheme takes, the education ministry must lay an appropriate loan recovery strategy and level the ground for all beneficiaries.
The introduction of the student loan scheme is a welcome idea, but must be well thought out before implementation. The proposal comes at a time when the cost of university education is skyrocketing, with universities being criticised for producing more job seekers than job creators.
One of the greatest bottlenecks experienced in many countries adopting the scheme is high default rates.
The education ministry needs to understand that irrespective of who receives the loan and at what interest rates, it has to be paid back. If this scheme targets brilliant needy students, then the Government should think twice before criminalising loan default. It is important to put into account that students cannot repay the loans without a source of income.
Issuing a list of stiff penalties to deal with loan defaulters who lack a source of income to repay the loans might bar potential beneficiaries from the scheme.
Joblessness is one of the greatest challenges that beset Ugandan graduates. The problem has led to brain drain in which Uganda loses a large number of its professionals to other countries. In 2000 alone, one in five Ugandans who completed tertiary education, or 21.6%, left for greener pastures, according to the report of the United Nations Conference on Trade and Development. Without an effective mechanism to track down graduate beneficiaries and in the absence of employment opportunities, the Government risks losing billions of loan funds in brain drain.
In a country where corruption is almost institutionalised, it would be challenging to ensure that the loans only go to the most deserving beneficiaries.
Awarding loans based on merit might also sideline brilliant students who go through less privileged schools.
Whichever direction the scheme takes, the education ministry must lay an appropriate loan recovery strategy and level the ground for all beneficiaries.