Gov’t readies to go after student loan debtors
Mompati Tlhankane | Monday April 10, 2023 06:00
This week Minister of Education and Skills Development (MOESD) Douglas Letsholathebe admitted that it has not been easy to establish the exact amount owed to government due to initial shortcomings of the manual sponsorship process employed for the tracking of tertiary education funding.
Responding to a question in Parliament, Letsholathebe said due to the scale of this operation, it is planned to complete in March 2025. Furthermore, the ministry commissioned a project to undertake the migration to a larger system, upgrading and enhancement of the Student Loan Management System in July 2019.
The project is still ongoing and it is expected to provide seamless and cost effective operations and efficient services to customers including automation of payments of former loan beneficiaries,” he said.
Letsholathebe, however, refused to believe that his ministry is lackadaisical in debt collection. He said the collection of debt is dependent on availability of financial records and employment details of beneficiaries.
“The Memorandum of Agreement signed between the students and the government stipulates that they should inform the government upon obtaining gainful employment in any sector of the economy to enable the government to recover the student loan. Beneficiaries who are employed in the government sector are tracked through the Government Payroll System. However, there remains a challenge with data collection from those employed in the private sector, Parastatals and Local Authorities. The ministry has to go to great lengths to collect data from such in an effort to trace those owing government,” Letsholathebe highlighted. Letsholathebe was responding to a question from Member of Parliament for Serowe North Baratiwa Mathoothe who had asked among others what happened with the company that was engaged to do student debt collections. In response Letsholathebe said his ministry did consider engaging a debt collection company in the past through a tender.
He revealed that the tender was cancelled because the ministry decided to build internal capacity to carry out the work. Letsholathebe also clarified that the ministry does not collect any revenue from unemployed graduates, those on internship or those in temporary employment. He pointed out that MOESD only targets and collects from those that have been gainfully employed in any sector of the economy as stated in the contract signed between the student and government.
“The Memorandum of Agreement signed between the students and the government stipulates that they should inform the government upon obtaining gainful employment in any sector of the economy to enable the government to recover the student debt but there is no enforcement clause in the contract. My ministry is in the process of developing a Tertiary Education Student Financing Policy which will include a review of the MoA,” he added. The MOESD administers loans for beneficiaries of sponsorship under the Grant Loan Scheme, which was introduced in 1995, replacing the five percent Bursary Scheme which only required beneficiaries to pay back five percent of their initial salary for the same duration that they were sponsored. The five percent scheme was introduced in 1973 and phased out in 1995.
The Grant Loan Scheme operates under five categories, with the majority of students sponsored under Category 1-3 which consists of Science, Technology, Engineering and Mathematics (STEM) related programmes, Health, Social Sciences, Business, Humanities and Hospitality fields. Government spends on average P2.4 billion on tertiary education financing. The bulk of the funds are expended towards Category 1-3, which consist of tuition grants. The last two categories, 4 and 5, have fewer beneficiaries and require beneficiaries to pay both tuition and maintenance hence the low recovery rate according to the MOESD.