Tuition loans to attract 7% interest

By Francis Kagolo                                                    

The ministry of finance has set a seven percent interest rate on the recently advertised students’ tuition loans.

It is now four days remaining for first year university students to apply for the loan scheme managed by the Education Ministry.

Education minister Jessica Alupo has explained that the seven percent interest rate will not be static as it has to fluctuate depending on the prevailing inflation rate.

“The ministry of finance set an interest rate which will not be static because we don’t want the money to lose value. We want the scheme to keep helping more students,” Alupo explained.

She said the interest is just enough to maintain the value of the money given to the board and not for profit.

Anyone interested in the loan has to apply after gaining admission in the 13 accredited universities.

They include Makerere, Kyambogo, Mbarara, Busitema, Gulu, Muni, Nkumba, Ndejje, Bugema, and Nkozi universities.

Others are Islamic University in Uganda, Kampala International and Uganda Christian University.

Michael Wanyama, acting executive director of the tuition loan scheme, has told New Vision that the application process has been a little slow because of delays in public universities’ admissions.

While most universities expect first year students to report this month, Wanyama explained that the final list of successful candidates would come out in early September.

“The delay did not come from our side,’ he said. “In future we want these public universities to come up with fixed admission timeframes to enable quick processing of loan applications.”

The scheme was introduced to increase the number of needy students accessing higher education. Some sh5b was earmarked for 1,000 pioneer students this year, mainly from science courses.

Each beneficiary will be allocated sh4m per year for tuition, functional and research fees as well as learning aids and appliances for students with disabilities. But those offering cheaper courses will receive less than sh4m while their counterparts on expensive courses can get more.

The Uganda Students’ Higher Education Financing Board (HESFB) also has leeway to give students more money for accommodation and meals when funds are sufficient.

Launching the scheme at Kyamgogo University in May, President Museveni urged needy bright students to take the loans but cautioned them against defaulting. He said defaulters will be arrested.
          
According to the Higher Education Students Financing Act, 2014, repayment of the loan shall be charged on the income of the person who received the loan. Repayment starts a year after the beneficiary has completed studies, whether employed or not.

The Act provides for a six-month jail sentence or a fine of at most sh1m to beneficiaries who try to default after graduating.

Employers who fail to remit a specified percentage off the beneficiaries’ salaries to service the loan also face 10-year jail sentence or a fine of at most sh10m.

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