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Loans board:Value retention fee aims to make higher education fund sustainable

A UNIVERSITY graduation ceremony. 

The beneficiaries of the
Higher Education 

Students’ Loans will pay value retention fee
to help sustain the fund. (File photo)




THE Higher Education Students’ Loans Board
(HESLB) has been issuing loans to students since

2005 but even before then, the government,through the
Ministry of Education started issuing loans to students

in 1994, being an implementation of Cost Sharing
Policy.

So far 137,204 students have benefited from the
scheme since 1994 and the government has spent

1,502,620,320,764/58 as at the close of 2012/2013
academic year. The Higher Education Students’ Loans

Board (HLSB) was established by Act No. 9 of 2004
and became operational in July, 2005.

The objective of the Board is to assist (on a loan basis)
needy students who secure admission to accredited

higher learning institutions, but with no means to pay
for the costs of their education.


The Board is also entrusted with the task of collecting due loans from previous loan beneficiaries in order to have a revolving fund in place so as to make the Board sustainable.

HESLB inherited loans amounting to 51,103,685,914 /- that was already issued to 48,378 borrowers by the government through the Ministry of Higher Education, Science and Technology between 1994/1995 and 2004/2005. 

The HESLB itself has since July 2005 to June 2013 issued loans amounting to 1,451, 516, 634, 850/58 Loans amounting to 222,090,318,636/00 from 137,204 borrowers were due for repayment, out of total loans 1,502,620,320,764/58 as at 30th June, 2013.

The remaining amount was not yet due for repayment for the reason that the students who benefited from these loans are either continuing with studies or their one year grace period of repayment is yet to expire.

Due loans that would have been collected as at 30th June, 2013 was 57,331,512,710/13 Despite issuing loans to students, the fund needs to be sustainable so that more of the needy can benefit in future.

Considering the increase in number of needy students joining higher learning institutions every year, it is obvious the government can not cope with the numbers of students in some 10 years or more to come.

This trend has necessitated the education sector stakeholders to think of the ways to retain the value of loans to higher education students to maintain more of them joining the higher education levels.

HESLB proposed ways of making sure that at least the value of loans issued to one student has to be able to foot another student’s education costs after some years when the former has graduated.

The proposal showed how effective the strategy would be and that the amount will not pinch beneficiaries on repayment. 

The result of the proposal was to allow a little amount of a fee on top of the amount that a loan beneficiary used to pursue studies. 

Since students’ loans are not commercial, so they do not attract any interests on repayment.

To put the value retention fee clear, the government through the Ministry of Education and Vocational Training in 2011 approved that all students who will be issued with loans from 2011/2012 academic year, will have to repay back their loans plus 6 per cent as value retention fee.

Before the introduction of value retention fee, the tendency was that, students who were issued with loans, were supposed to start repaying their due loans one year after they have graduated in the same amounts they were loaned.

Again loans are not paid in lumpsum but rather they are calculated in a way that due loans are segmented into small instalments and a loan beneficiary is paying per month according to his/her monthly earnings.

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