In the wake of the introduction of Cost Sharing Policy by the government of Dr. K.A Busia in 1971, subsequent governments have ensured the operation of a loan scheme to help students source some funds to meet part of their educational expenses.
The SSNIT Students Loan Scheme which operated for close to ten (10) years was characterised by cumbersome procedures with regards to the difficulty in securing three (3) Guarantors who must be workers under the SSNIT Pension Scheme and has recently been replaced with the Students Loan Trust Fund (SLTF).
The new scheme, though a step in the right direction is rather unfriendly and unwelcoming to the good students of Ghana. It is sad to note that beneficiaries of this loan will be required to repay their loans with interest rate compounding annually (during the period of study through to a year grace period) and semi-annually (during the repayment period) at the existing Government of Ghana (GOG) 182 day Treasury bill rate. In other words, the interest rate on this new loan scheme has been pegged with inflation.
Over the years our economy as a country has experienced serious economic conditions with inflation fluctuating between 11 – 50% signalling an extremely difficult situation for beneficiaries of the SLTF who are in dire need of this loan to augment the little assistance they receive from their family members. The unpredictable economy of ours owing to mismanagement by governments, hikes in crude oil prices amongst others should not see her wrath on the innocent students of our country.
The unanswered question still stands that “Why should students be made to face the full rigours of government's inability to manage the economy coupled with a country of ours which is bedevilled with uncontrolled hikes in crude oil prices?” (After all, who manages the economy?) It will therefore be suicidal for the SLTF to entrust the interests of the Heartbeat of students at the mercy of our erratic economy unlike predictable economies like that of USA where inflation is between 0 – 5% p.a.
The National Students Financial Scheme (NSFAS) as operated in South Africa is to assist students to fund their education with loans at low interest rates with a reasonable repayment plan and do not require guarantees. Although the NSFAS interest rate is also nailed at the country's inflation, it is enviably low for the students to afford because it is highly subsidised by government and other donors. Furthermore, up to about 40% of the loan to students is converted into bursaries (portions of the loan that are not paid for) and are awarded to some students depending on their academic performance. It is refreshing to observe that over a span of ten (10) years, students in South Africa have enjoyed loan facilities with an average rate of 8.075% with a very flexible repayment schedule. (www.nsfas.org.za)
Students all over the various campuses are already overburdened with high Facility User Fees, Accommodation crises, high cost of living etc. The issue of interest rate on the new loan scheme is just describing the insensitivity and selfishness of the SLTF towards the students of our dear country. The flimsy excuse given by the Board is that this loan trust is operating on the so called principles of sustainability, scalablility and market-oriented. Are these principles to worsen our already existing plights?
At a time when the Students Loan Trust Fund is yet to go through the necessary parliamentary proceedings to establish the Trust as a statutory body, it is imperative on government and the SLTF Board to as a matter of urgency reconsider the provision(s) in the repayment of this new loan scheme.
Based on the foregoing we strongly recommend that:
1.Government must set a ceiling rate of 10% on the SLTF so that in cases where the government of the day fails to manage well the economy and the GOG 182 day T/Bill rate goes beyond 10% it (government) bears the cost of the difference in the rate. This will release students from the shackles of numb governments who may put our economy into hay wire. It will also plant government on her feet to ensure proper management of our fickle economy.
2.Government must deregulate the system to enable other financial institutions to give loan facilities to students. This will create competition among the financial institutions and that will exert downward pressure on the interest rate of this loan.
3.Government should consider converting some percentage of the loan into bursaries as practiced in the NSFAS of South Africa. This will be a bold step on the part of government in ensuring the realisation of the country's agenda as enshrined in article 25 of the Constitution of the Republic of Ghana which states “All persons shall have the right to equal educational opportunities …… and in particular by progressive introduction of free education.”
4.Government should facilitate and encourage the establishment of Aid Funds that will seek to award grants to tertiary students who cannot afford to fund their own studies.
Fellow Ghanaians, we all should not lose focus of the fact that “Education; is a RIGHT not a privilege” and therefore it is vital for government and the citizenry to commit themselves in achieving this right. Let us all be part of this crusade in advocating for the right thing to be done.
Local NUGS President
University of Cape Coast.
E-mail : [email protected]
Issued in Cape Coast
January 16, 2007