Wednesday April 30 2014

Student loan scheme not as rosy as it seems

By Henry E. Okurut

The student loan scheme that was launched by President Museveni last week should be lauded for several reasons. First, the obligation to repay the loan upon completion of studies will encourage the beneficiary students to opt for only those courses that will readily earn them well-paying jobs.

Secondly, unlike the students studying on a tuition-free arrangement, students on loan schemes often tend to take their studies more seriously.

Thirdly, the tertiary institutions and universities will themselves be compelled to hire only exemplary human resources to deliver quality relevant courses that have a competitive advantage in the labour market.

Fourthly, the lending and repayment mechanisms can be manipulated to promote equity in the provision of higher education by giving preferential treatment to vulnerable groups such as the disabled, the needy but academically capable, the women, the people in conflict areas, etc.

However, the loan scheme could also turn out to be counterproductive in the following ways:
• Students on a loan scheme could have a disturbed concentration on their studies since they will be constantly worrying about the burden of repaying their loans after completion of their studies. This is particularly true for students coming from poor backgrounds that, ironically, the scheme is targeting!
• Loan recovery can prove to be very difficult to enforce in cases where “completers” move out to other countries for greener pastures.
• The administrative costs of operating the loan scheme could turn out to be prohibitively high. A well facilitated board with an elaborate secretariat of full time employees needs to be put in place, not only to constantly oversee the mobilisation and allocation of loans amongst a big number of deserving students, but also to closely monitor, track and facilitate loan repayments.

• And, on a lighter note, it is not clear how the scheme will impact the future marriage prospects of the female completers. Personally, I would hesitate to court for marriage a lady who is already heavily in debt! If the scheme is going to scare away prospective future husbands/suitors from female graduates, what implications will it have on gender equity in higher education and on the sustained survival of the marriage institution?