Uganda: government chases student loan defaults from workplaces
The government has finalized arrangements to track recipients of its student loan program to their jobs to collect the money.
Senior sources say the government has set up a specially designed virtual platform that employers will need to log into to check whether or not their new hires have taken out a student loan.
If he is a beneficiary, the employer will be obliged to deduct a maximum of 30 percent of the employee’s net monthly salary and remit the money to the Higher Education Student Funding Office (HESFB), according to its spokesperson, Mr. Bob Nuwagira.
âAn employer who knowingly does not notify the board of directors of the employment of a person who has received a student loan commits an offense and is liable, on conviction, to a fine not exceeding not two hundred and forty monetary points (4.8 million Shs), or a prison sentence not exceeding ten years, or both “, he added.
This journal includes that HESFB aims to recover Shs32b over the next six to 12 years from 3,090 graduate students out of a total of 11,187 beneficiaries since 2014.
She said she supports the follow-up of beneficiaries to their places of work.
“These people [government] have been there for us in the hard times when we were unable to afford the tuition for ourselves. So deducting a certain amount from our salaries is not bad because we have to repay the loan, âMs. Nambora said.
Although still unemployed, Ms Namboira said she would start repaying the loan for any self-employment.
Mr. Nuwagira said they had recovered Shs 400 million and that 25 students had fully repaid their loans, even before the due date.
The Financing Board, according to government officials, will write to public and private sector employers to comply with the development.
The move follows many loan recipients who found jobs after graduation, but refused to repay the money.
This means that students who have studied with government loans, in addition to Pay As You Earn (PAYE), the five percent of the National Social Security Fund (NSSF) and tax deductions for local services, will also forgo to part of their monthly salary to clear the loan. .
The Higher Education Student Funding Council was established in 2014 to provide loans and grants to Ugandan students who are qualified to pursue accredited programs at recognized higher education institutions, but who are financially incapable.
Mr. Nuwagira said some beneficiaries have started repaying the loans even when they are still in school.
“Parents help this category to repay small amounts so that by the time they finish school their loan portfolio is small. Amounts paid before the end of the grace period do not bear interest,” he said. -he declares.
The maximum repayment period is double the study period plus the one-year grace period. This means that a student who studies for four years has nine years to repay the student loan.
The Financing Office can also reschedule a beneficiary’s repayment plan when they cannot find a job after graduation.
Once the loan repayment grace period expires, it attracts higher interest rates.
To date, there has not been an elaborate system to track loan recipients who could sometimes change their name, location, and / or simply run away and hide.
The loan program was not without its problems, however. In the latest cohort of beneficiaries, 47 students are expected to lose their loans after declaring their parents dead or themselves disabled, in order to miss the opportunity to study.
Government stops loan support
Last week, the government canceled student loans for 47 college students who lied about their parents’ deaths. .
Students come from various public and private universities including Makerere, Kampala International University, Kabale, Kyambogo, and Ndejje University. The students concerned will sponsor themselves from the second semester of their first year of study.
“In accordance with Article 38 of the Law on Financing of Higher Education Students, a candidate who makes a false declaration to the board of directors commits an offense. It is in this context that the board decided to terminate your loans with immediate effect, “wrote a letter to one of the beneficiaries read in part.
The names of the affected students were withheld to protect parents and other family members who were not involved in the forgery.