Student loans jump to K3.8 bn
Former students of Malawi’s two oldest public universities now owe government K3.8 billion, up from the previous K1.7 billion out of which the Loans Board has only recovered K35 million.
In a bid to recover the money, Higher Education Students’ Loans and Grants Board executive director Chris Chisoni said in an interview the Board now plans to go an extra mile by placing the recovery of public university students’ loans obligation on employers because individuals have proven elusive.
He said that currently beneficiaries across several cohorts up to 2013 owe the Loans Board K3.8 billion.
Said Chisoni: “Beneficiaries are duty-bound to give the Loans Board details of their employer or subsequent employers or face the law for hiding such information. Failure to deduct or remitting after deductions attracts a penalty of up to a sum equal to 10 percent of the total monthly repayment.”
He cited Section 29 of the 2015 Higher Education Students’ Loans Act which reads: “Employers shall demand every employee to declare whether they have a student loan, notify the Loans Board within 30 days of the employment of a loan beneficiary and ensure that the employee arranges with the employer for the monthly deductions and remittance of repayment instalments to the Loans Board.”
According to Chisoni, employers who fail to comply with the Act commit a crime.
He said the board foresaw a possibility of bad apples in society; hence, the Act demands that the employer declares the employees under Section 30 of the Act.
He said: “An employer who fails to notify the board that he has in his employment, a loan beneficiary shall, on conviction, be liable to a fine of K1 million. Thus, if an employer has 10 student loan beneficiaries in its employment, but decides to hide them, a fine of up to K10 million awaits you, upon conviction.
“Since we started discussing with the employers, we have visited 77 companies. From April we have received 259 phone calls asking how they can pay back their loans and 37 companies have given us the list of their employees who have been at public university. So, working with the employers has been an effective way of tracing the loan beneficiaries.”
Chisoni said the board gave a grace period of up to 12 months for recovering loans at their original value.
“By March 2017, all loans will be calculated with an interest and using exchange value prevailing at that time. In other words, failure to pay now, means paying more from March 2017.
“This duty also extends to the beneficiaries’ obligation to inform the Loans Board details of their status [formally employed, self-employed or not employed] upon completion of their whole study or part thereof,” he said.
Higher Education Students’ Loans and Grants Board was put in place and mandated by the Act of Parliament No. 2 of 2015 to support access to higher education by needy and deserving students admitted into registered public and private higher learning institutions through the provision of financial support to such students in the form of loans. And the Act mandates the board to collect all outstanding loans beginning 1985/86 academic year.
Beneficiaries of the outstanding loans are from the University of Malawi (Unima) and Mzuzu University (Mzuni). Lilongwe University of Agriculture and Natural Resources (Luanar), formed through the delinking of former Unima constituent college Bunda and merger with Natural Resources College (NRC), and Malawi University of Science and Technology (Must) are the newest beneficiaries. n
