Nine years later, the Higher Education Students’ Financing Board (HESFB) is struggling to implement the scheme amidst endless government commitments to fund the board, writes YUDAYA NANGONZI.
“Due to budgetary constraints, the board wishes to bring to your attention that we shall not be considering [student loan] appeals of the Academic year 2022/23,” the HESFB tweeted on its official page.
This tweet, which raised uproar from prospective loan applicants, was followed by a notice from the board’s executive director, Michael Wanyama. He noted that for all applicants who re-applied, the arrangement had been called off.
“Applicants who wish to be supported through the Students’ Loan Scheme can apply in the forthcoming call for Student Loan Applications for the Academic Year 2023/24, provided they are still eligible. We are sorry for any inconveniences this may cause,” Wanyama said.
This was the first time the board called off appeals since its inception in 2014. One frustrated student replied: “Seriously, my hopes are done. Kindly consider the appeals and reduce next year’s number of beneficiaries. Some of us are killing a whole year. I did last semester’s exams on probation and hopeful that I would get a loan scheme through appeals.”
The student got a prompt reply that “the board has not received any extra funds to consider applicants on appeal as anticipated.”
Last year, the board received 3,089 eligible applications but shortlisted only 625 students – citing budget cuts and funding constraints. With no A-level candidates in 2021 due to the Covid-19 shutdown of the education sector, most of the beneficiaries were a spillover of those who had missed tertiary admissions.
WHY APPEALS WERE CANCELLED
The Observer has learnt that the initial 625 beneficiaries further dropped after 44 students declined to take up the loans while others had got other study loans. This created a window in which more than 2,500 students appealed to the board to consider their applications as had been the case.
“When the students appealed, it took some time to work on them. This was during the festive season and it took more time than usual to prepare the final appeal lists. The law stipulates that the board writes to the minister of Education about the appeals,” a source told The Observer.
Normally, when students decline to take up loans, their funds are allocated to new people through appeals. This time, the board communicated to the minister that the Shs 281 million that had been saved from withdraws was too little to facilitate new students given the overwhelming number of appeals.
“It was realized that by distributing the Shs 281m, you cannot achieve equity and regional balance. It was hard to be explicitly fair to the few that would have been considered for funding. It became an uphill task for the board to consider appeals that is why it was cancelled,” the source said.
The source added: “For instance, if a prospective science teacher declined to take the loan, you cannot replace them with a medical student. Their tuition and course durations are different yet the saved money was too little.”
It’s worth noting that the board – effective last year – stopped funding courses that are priced above Shs 7.3m per annum. This move affected medical students at Uganda Christian University in Mukono and Islamic University in Uganda which declined to subsidize tuition for the students. Currently, the board is also living in debt and tuition arrears worth Shs 14.5bn arising from the Financial Year 2021/22.
The Observer is also reliably informed that students are completing their second year of study without tuition payment from the board. University officials who declined to be named said the mere fact that they signed memorandums of understanding with the board, they treat loan students as paid-up students in anticipation that HESFB will pay them.
However, some remittances to private universities are often made since they heavily rely on tuition to run their institutions.
“I know of private universities demanding Shs 4.4bn, Shs 2bn, and Shs 1bn. The universities are stranded over the non-payment but when you are demanding government, you must be extremely patient. If the money doesn’t come through, it remains in arrears just like other suppliers as long as you have an MOU,” the source said.
“If a student completes their program before the board remits the fees, they cannot pick their transcripts until they pay. So, the universities hang on to the student’s documents until they fully pay.”
Another source said the board nowadays apportions funds to finalists and those who are yet to complete their courses such that by the time they graduate, they are fully paid up as first and second years wait in the queue. The board is now incapacitated and grappling with getting 100 per cent budget releases like in the previous years.
NEW CHANGES TO LOANS
Amidst the scarcity of resources, the government has decided to revise the student loan scheme, according to the spokesperson of the Education ministry, Dr Denis Mugimba.
The scheme is meant to support science-related disciplines – save for persons with disabilities who are allowed to pursue both science and humanity courses.
“Due to the financial pressures on the revenue of government, all priorities are not receiving the funding that they deserve.
The priorities now need to be re-prioritized and some are given low orders depending on the current urgent issues,” Mugimba said.
He added: “The position taken is that we shall only take on students that can fit within the available budget as opposed to dwelling much on the number of beneficiaries taken the previous year. The priority will also be on first ensuring that those who are studying have funds to push them forward. We expect to have varying numbers in the beneficiaries.”
He reiterated that the loan scheme is a government priority but funding remains a challenge. Asked whether the revisions will not have a ripple effect on the country’s human resources in science fields, Mugimba responded in the affirmative.
“HESFB funds are directly allocated by the Finance ministry. So, no money comes to the Education ministry for us to decide how much to give the board. Also, the Finance ministry has told us that within two to three years, the economy should have stabilized. But during this period, we need to tighten our belts and re-prioritize our priorities as there’s nothing like doing business as usual,” Mugimba said.
In the Academic year 2021/22 – after seven years of waiting – the board had embarked on supporting continuing students but no funds were set aside in the academic years 2022/23 and 2023/24.
Mugimba explained that the Shs 500m was a relief package and one-off intervention for finalists that had been affected by the prolonged closure of education institutions due to Covid-19. As a result, the scheme will stick to first-year student applicants. He shared some of the proposals that the ministry is studying for the student loan scheme.
“People are asking us to open up the loan scheme to as many as we can afford irrespective of one’s background. We are also hearing voices to open up the loan to humanity programmes, scrap the 4,000 undergraduate direct entry bursaries to universities and convert the bursaries to form part of the loan scheme. These proposals are coming through but it will be cabinet to make a final submission.”
He urged those on the study loans not to take it as an “entitlement” but to study hard, perform well, and open chances of getting well-paying jobs to enable them to repay the loans.
WAY FORWARD
For a scheme that started with thousands of beneficiaries and is now staggering with hundreds of students, it leaves a lot to be desired. The board is now targeting resource mobilization from loan repayment.
At least Shs 46bn is in debt and needs to be collected between five and 10 years. HESFB statistics indicate that 4,583 beneficiaries have completed their studies and exhausted the one-year grace period. Of these, only 53 students have fully paid off their study loans while more than 30 students are paying consistently.
Some beneficiaries are still unemployed, on short-term job offers, while others changed their contact numbers and are being tracked.
Section 23(5) of the HESFB Act states that “a person who has no income for the repayment of the student loan, shall within 14 days after receiving a notice under section (4) in the prescribed manner inform the board accordingly and thereafter update the board with information concerning his/ her position after every three months. A loanee can also negotiate a flexible repayment plan within their repayment period but must complete their loan repayment within the stipulated period.”
Sadly, the board has since lost 18 beneficiaries. Their loans were written off through the loan protection fund – one per cent of the annual gross loan amount that every student contributes. This fund applies also applies to beneficiaries that become permanently incapacitated.
nangonzi@observer.ug
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