Tougher student loan conditions coming
Borrowing from the Student Revolving Loan Fund by Barbadians aspiring to enter university could soon become harder as the authorities are said to be preparing to impose tougher terms and conditions.
Investigations by Barbados TODAY revealed that Government may be considering removing the unsecured loan provision for students seeking $50,000 or less from the financing programme.
Currently the Fund’s website states: “For loans $50,000 and less no sureties are required. For loans above $50,000 the SRLF now has the flexibility to accept collateral security (Cash, Government Bonds, Cash Surrender Value on Life Insurance, Land, Property, and Treasury Notes) for loans or two (2) sureties.”
But an upcoming Cabinet decision may change that, according to an official source who requested anonymity because the person is close to the decision-makers.
The source told Barbados TODAY the Freundel Stuart administration was being forced to reconsider the unsecure small loan provision because of conditions attached to a pending loan from the Caribbean Development Bank (CDB) to the Government of Barbados to finance the Fund.
The CDB approved a US$7.75 million loan in October 2015, but according to the source, arrangements to draw down on the money hit a snag because the lending institution wanted all funds disbursed with a 100 per cent guarantee, a condition which stood in stark contrast to the policy of not seeking sureties for loans of $50,000 or less.
A document proposing that the SRLF scraps the no-surety provision is either now being prepared, or is likely with Cabinet, the source said.
The source was unable to explain why it took one year for Government to move to satisfy the conditions set by the CDB.
Barbados TODAY revealed last month that the SRLF had been rejecting loan applications without explanation, leading to some to conclude it was broke.
Minister of Education Ronald Jones later said the lending scheme was not broke but was in no in position to approve loans at that stage.
Speaking to the media on August 11, he promised that once the CDB funds were drawn down the rejected students would be reconsidered.
“Cabinet has been asked to look at some broader policies for the strengthening of the Student Revolving Loan Fund,” Jones said at the time.
However, in his presentation of the 2016 Financial Statement and Budgetary Proposals the following week, Minister of Finance Chris Sinckler said the fund was facing “challenges” while it was awaiting the CDB money.
He also announced that Government would seek $5 million from the National Insurance Scheme (NIS) as an emergency measure in order to make money available to students.
“Due to the urgency of the situation and so as not to disadvantage these students, the Retraining Fund Account which is managed by the NIS will be invited to invest in a special Treasury Bill issue to the tune of $5 million to provide an immediate injection to the Student Revolving Loan Fund,” Sinckler said at the time.
When CDB announced the loan approval last year, it stated that the financing was intended, “to improve access to tertiary education in Barbados and to strengthen the business operations of the country’s Student Revolving Loan Fund.
“The loan will assist SRLF, the principal source of student loan financing in Barbados, in providing tertiary education loans for new and continuing students,” it said.
The CDB release added: “Through the financing provided by CDB, it is estimated that by 2019, at least 675 student loans will have been issued; that the financing will have produced at least 160 graduates; and that a plan for enhancing the effectiveness and sustainability of SRLF will have been completed.”
At the time of the announcement, CDB Acting Director of Projects Andrew Dupigny said the financing would help provide Barbadians, “especially those most in need” with a a better chance of successfully completing their tertiary education.
“Providing access to affordable higher education financing will help Barbados develop a skilled, well-trained workforce equipped to boost the island’s competitiveness and contribute to sustainable economic growth,” Dupigny said then.