EDITORIAL COMMENT: Student loans’ return great, but beneficiaries must repay

The Chronicle

Those among us who learnt at local public colleges and universities in the 1990s and earlier will remember the ease with which they went through their studies.

They enjoyed exceedingly comfortable on-campus living conditions. 

Their college or university provided them with basically everything – linen, which was laundered for them weekly, cutlery as well as toilet paper. 

They had three good meals every day and their boarding facilities were always well maintained. 

All they needed to do was to pay a token amount to be able to get a meal card, a piece of paper they presented in the dining hall to be ticked off every time they had meals.  Over and above these conveniences, the Government paid each student a payout at the beginning of every semester. 

The students were expected to pay back after graduating and getting a job.

Indeed life was comfortable for students then which meant they only concentrated on their education, not stressing about where their next meal would come from or where they will get money to pay rentals and so on.

However, around 2000, the Government realised that most of the graduating students never made an effort to repay what they owed.  Debt collection agents were engaged to enforce payment but they failed to do the job.  The foregoing, plus the economic difficulties that set in at around the same time, forced the Government to drop funding students at institutions of higher learning.  The students were now bound to self-fund or to have their parents or guardians doing so for them.

But because of the economic challenges that have persisted since 2000, a good number of students could not keep up with their payments resulting in some discontinuing their studies.  Those who persevered have had to play a cat and mouse game with college and university authorities pressing for payment which students didn’t have.  

It was a bad situation, which denied thousands access to education and by extension, access to job opportunities.  There is no denying that this, too, represented a reversal of the country’s status as one of the globe’s most educated.  

The Second Republic has signaled a return of student loans, a big announcement made by Higher and Tertiary Education, Science and Technology Development Minister Professor Amon Murwira on Sunday.

Established in terms of Section 14 of the Manpower Planning and Development Act [CAP: 02] in consultation with the Minister of Finance and Economic Development, the student loan scheme is meant to assist needy and deserving students.  It will be administered by CBZ Bank and accessible through the institutions of higher and tertiary learning.  Students will begin accessing application forms with effect from August 26, just slightly over a month from today.

“We are trying to improve access to higher and tertiary education,” said Prof Murwira. “This is a loan which must be paid back to enable the sustainability of the critical intervention.  We are now very strict. This is a commercial arrangement and students will have to pay (back). Government used to have this facility, but it collapsed during the 90s due to non-payment.  We cannot continue to be careless and we will follow up on beneficiaries. We want to support and empower the next generation.

“If assessed and approved, the beneficiaries will pay as they go. The payments will differ according to beneficiaries’ capacity. The system will be tailor-made to the capability of the individual.”

This is very good news for students, their parents and guardians and college administrators alike.  

We note that attempts were made over the past 18 years to reintroduce student loans but all of them failed.  The one that was announced in February 2018 had a major weakness in that it was private sector-led.  Students had to apply for the loans that were offered through ZB, NMB, POSB, CBZ, Eduloan and Getbucks.  The banks demanded collateral security from learners as a key requirement for them to access the money.  Most of the applications were turned down on this basis.

It must have been clear to the banks, and to some extent the Government, that expecting a college student to be able to provide collateral security before accessing an education loan was always impossible.  It is no different from expecting torrential rain from a clear blue sky; or expecting a fish to fly.  We thus had a situation where private institutions expected a chick to hatch before a fertilised egg has been laid.  

Yes, there can be a few very unique cases, but the logic is that a person in college is in college to be able to learn, graduate and secure a job and with it an income to be able to acquire assets that he or she can cite as collateral security when applying for a loan.  

The new model is likely to be more accessible than the attempts made post-2000.  It must work because this is government funding being made available to deserving students through a government-owned financial institution.  Students don’t expect to be bogged down in collateral issues as was the case with the 2018 loan scheme.    

However, beneficiaries must be aware that these are not free funds.  They must be prepared to repay the loans as soon as they get gainfully employed.  If they are not prepared to repay, the Government, as Prof Murwira emphasised on Sunday, must ensure that they pay back the loans.  A strong follow-up mechanism must be put in place and diligently used to track all graduates wherever they are.  Pursuant to this, we don’t think it is a bad idea, or an illegality, for institutions of higher learning to withhold certificates of students who benefitted under the scheme and only release them after the students finish repaying the loans.