End of era as Education ministry takes over students loan scheme

After 11 years of disbursing study loans to needy but brilliant students to pursue science-related courses and a few humanity programmes, the Higher Education Students’ Financing Board (HESFB), officially concluded its operations at the end of 2024.

The ministry of Education and Sports has since taken over all functions of HESFB as part of government’s rationalization policy aimed at reducing costs by merging overlapping entities. YUDAYA NANGONZI reflects on the board’s journey, its progress, and the challenges faced along the way.

In 2014, government embarked on an ambitious journey to make higher education more accessible by launching the first-ever student loan scheme. The Higher Education Students’ Financing Board (HESFB) arose from a promise by President Museveni during the 2011 presidential elections.

The scheme was meant to address the growing number of students who, despite their academic potential, faced financial barriers to joining higher education. Established by an Act of Parliament in 2014, HESFB’s mission was to disburse and recover study loans, increase access to higher education, fund critical programmes that spur socio-economic transformation, and create a revolving fund for other needy students.

The study loans cover tuition fees, functional fees, research fees, and aids and appliances for persons with disabilities at both degree and diploma levels. Unfortunately, on December 30, 2024, HESFB ceased operation. This was in line with the government’s Rationalization
of Government Agencies and Public Expenditure (RAPEX).

EARLY DAYS

At the center of HESFB’s journey was Michael Wanyama, now a former executive director, who reminisced on the 11-year journey.

“It has been a bitter-sweet journey,” Wanyama said.

As the first executive director, he recalled being ushered into office alongside a small but dedicated team of six staff, which had grown to 28 by 2024. To many, the idea of government-funded study loans for higher education was more of a foreign concept despite countries in the region like Kenya, Tanzania and Rwanda running similar schemes successfully.

“Many students thought it was a hoax. Some politicians initially viewed the scheme with skepticism, mistaking it for another failed government initiative,” he said.

When the first board, headed by Fr. Prof Callisto Loceng, took office, the scheme was little more than an idea on paper. With no precedent for such a scheme in Uganda, Wanyama said, his team started from scratch.

“We came to HESFB and none of us was an expert,” Wanyama, also a chartered accountant, admitted that he had no prior experience in managing a loan scheme. The board supported his team to visit countries including Ghana, Kenya, Tanzania, and South Africa, to benchmark on how to handle the scheme.

With a budget of Shs 6bn, the board started operations. In the academic year 2014/15, out of 2,125 applications, only 1,201 students were supported. With rigorous awareness campaigns, the initial skepticism about the scheme gradually began to fade. By the end of 2024, the board had supported 16,439 students in more than 150 programmes since inception across 25 public and private chartered universities and 33 Other Tertiary Institutions.

BOARD ACHIEVEMENTS

According to Wanyama, beyond awarding study loans, the major achievement of the board was the ability to recruit highly skilled personnel. He boasted of high staff retention from 2014 to 2021 until discussions of rationalization set in.

“We had a small but dedicated family. We even dropped formal titles to foster openness and mutual respect. For instance, why should staff make appointments to see me?” Wanyama asked.

He added: “I also changed my office door to half-glass so staff could easily know if I was available. During loan-award sessions, I would see staff working late into the night and I never had to monitor them.”

He noted that despite the limited resource envelope, the board consistently received funds through the Education ministry to run the scheme. The board initially focused on funding students in science-related courses, but over time, it expanded its scope to include students with disabilities irrespective of whether they were studying arts or science programmes.

As the board closed, it had funded 129 students with disabilities. One of the more profound changes was the increase in female participation in science programmes. In 2014, only 22% females received loans compared to 78% males. By the last academic year 2024/25, the gender disparity narrowed to 42% females against 58% males.

Wanyama attributed the improvement in female performance to more girls offering science combinations at A-level which eased their application for study loans. The board’s adoption of an online application system also streamlined the loan application process, omitted errors, and increased accessibility to the scheme.

Uganda also became a member of the Association of African Higher Education Financing Agency (AAHEFA), a network of 13 African countries offering study loans or scholarships. Uganda joined AAHEFA in 2014, with Wanyama serving as the secretary general for eight years. Uganda will remain a member of AAHEFA subject to payment of its annual membership fee of $10,000 (Shs 36.8m).

CHALLENGES

Despite the successes, Wanyama said limited funding was the board’s major challenge. The demand for loans, over time, outpaced the available resources. On average, the board received more than 6,000 applications annually, but could only support about 1,500 students each academic year.

This left thousands of deserving students without financial assistance. The varying admission timelines of public and private universities also posed difficulties to the board. Students would apply to multiple institutions for the same course, creating confusion in the system.

“Can we have one central admissions board for institutions of higher learning?” Wanyama asked. “This would ease the selection process as the board cannot award study loans unless all institutions have concluded their admissions.”

The rising unit cost of programmes has also seen the board suspend sponsorship of some courses. For instance, in this academic year 2024/25, the board did not fund students for Human Medicine in some private universities where tuition exceeded Shs 12m per annum. This would result in a total loan of about Shs 60m over a five-year programme and repayment is expected in 25 years.

To the board, such high costs would burden the borrowers. Wanyama insisted that institutions may not have uniform fees but could stay within a reasonable range for similar programmes.

LOAN REPAYMENTS

By the time the board was dissolved, it had received Shs 154bn from government to run the scheme since 2014. However, the repayment process was slow. Every beneficiary is given a grace period of one year and their study period is doubled to repay their loan.

As of 2024, the board had so far recovered Shs 3bn of the Shs 96bn in outstanding loans recoverable in the next 15 years. Some 96 students have fully paid off their loans at once before exhausting the grace period. Wanyama explained that the recovery process was compounded by understaffing of the board, unemployment, unresponsive employers to declare beneficiaries, and the difficulty in tracing students who had changed their contact details.

To ease operations, Wanyama said the board had succeeded in listing all the borrowers on the Credit Reference Bureau. A student cannot take on any loan from a commercial bank before repaying the student loan.

As part of the recovery efforts, the board also implemented a loan protection fee payment – every borrower pays 1% of their gross loan amount to mitigate against death or permanent disability. To date, 23 beneficiaries have passed away and their loans were written off.

END OF AN ERA

The closure of HESFB didn’t come easily under the stewardship of Dr Charles Wana-Etyem as the second board chairperson. Initially, the first Parliamentary Committee on Education agreed to retain the scheme under a semi-autonomous entity.

However, MPs unanimously agreed with a minority report which proposed the transfer of the roles of HESFB to the education ministry. Following the presidential accent of the RAPEX bill, the HESFB was dissolved, and the semi-autonomous operation, recruitment of staff, and position of the executive director were all abolished.

All the other functions of the board including administering the study loans and recovery processes were taken over by the Education ministry in the amendment. Effective January 2025, Wanyama was given a six-month contract to head the newly established Higher Education Students Financing Secretariat within the ministry.The interim period is set to allow for the recruitment of new staff.

Before handing over on December 30, 2024, all HESFB staff received termination letters.Currently the “board”, still operating in its old permises is working with skeleton staff to finalize writing their financial statements.

The HESFB website is set to close and all loan-related information will run on the ministry’s official website while a few social sites of the board will be retained but under the logo of the Education ministry. Asked to reflect on his 11 years of service,Wanyama had this to say.

“We have transparently managed the loan scheme. I have ethically, through the board, run this scheme and have never been investigated for any wrongdoing. I am proud that I have not taken on any bribes to get people onto the student loan beneficiary lists. I want to leave the scheme with my head held high that I have served diligently.”

Wanyama urged beneficiaries to repay their loans or approach the ministry to reschedule loans to enable other needy students to access higher education.