Government suspends study loans  for 1,000 varsity students

The Higher Education Students Financing Board (HESFB) has suspended study loans for second, third and fourth-year students in all universities and tertiary institutions across the country, citing financial constraints. 
Addressing members of Parliament’s Education Committee at Parliament yesterday, the executive director of HESFB, Mr Michael Wanyama, said the government last released funds for the students in the 2020/2021 financial year.

In an interview with Monitor yesterday, Mr Wanyama said they received Shs500m in the 2020/2021 financial year.
“I don’t want to say we have dismissed it for good. We have suspended the scheme for these particular students until we get money. We are only sponsoring first-year students,” Mr Wanyama said. 
The board has asked the government to reinstate the fund for continuing students and asked for Shs4.5b to sponsor at least 1,000 continuing students in the 2023/2024 financial year.
If the government provides the fund, a total of 2,500 (1,000 continuing and 1,500 first year students) will be sponsored this academic year which kicks off in August. 

However, the spokesperson of the Ministry of Finance, Mr Jim Mugunga, said all government agencies are constrained by limited resources and they should have priorities.
“Just like so many other government institutions, HESFB is competing for resources that we cannot easily avail in light of revenues and resource envelope that the government has. It is advised that they prioritise their budgeting expectations,” Mr Mugunga said in an interview with Monitor yesterday.
He added: “It is prudent for them to commit the budget lines to areas where resources have been promised. It will be an irregularity of them to commit and attract more arrears that will tantamount to the abuse of the process.”

Background
The study loan scheme commenced in the 2014/2015 financial year to give financial assistance to needy students in higher institutions of learning. The students were required to refund the money after completing their studies.
The Minister of Education approved scheme for first year students only.
Mr Wanyama said they later realised that many students who were paying their own tuition were dropping out of school because they were struggling to pay tuition.  
Research conducted by Makerere University revealed that 25 percent of students failed to complete their studies due to financial difficulties.  
The HESFB then asked the government to consider funding 1,000 second, third and fourth year students. 

Mr Wanyama said Parliament later approved the scheme and gave HESFB the initial capital of Shs500m. The money was supposed to increase in the subsequent years but this did not happen.
“Even with the little money, we were able to give out loans to 125 continuing students who were in their second, third and fourth year of study,” Mr Wanyama said. 
Five years ago, the State minister for Higher Education,  Dr John Chrysostom Muyingo, said the funds for expansion of the scheme to cater for second, third and fourth  year students will be got catered for as and when the government gets the money.

However, the HESFB plans to sponsor at least 1,500 first year students and has asked for an additional budget of Shs6b.
The HESFB’s projected budget for 2023/2024 is 35.7b to sponsor 1,500 first year students and 1,000 continuing students.
Since its inception in 2014, HESFB has given loans to 13,405 students in tertiary institutions across the country.
According to the available figures, HESFB in 2014 received Shs6b and sponsored 1,201 students. The highest number of students was recorded in 2018 where the board gave loans to 2,943 students after the government released Shs29.5b.
However, the numbers started going down in 2019/2020 to 1,851, in 2021/2022 (1,146) and 2022/2023 (600).

Recoveries
All students who attain study loans are given one year grace period and double the years of study to repay back the money. This means that a learner who offers a three-year course is given seven years to repay the money.
According to Mr Wanyama, a total of 4,860 students (diploma and degree) have completed their studies and are supposed to pay back a total of Shs46b.

“We have done our projection indicating how much we have to recover this year and how much we have to recover next year. Last year, we recovered about Shs1.1 billion. It’s still little, but like I said, in the initial years, you don’t expect much,” Mr Wanyama said.
He added: “This grows with time, like even in this year, we expect to recover Shs1.2b. This is because people continue getting jobs and are promoted, so the amount recovered will grow with the years and we shall form a revolving fund.”