First Look

Short sighted approach to student loan delinquency says G2K

G2K | 2013-04-22 00:00:00

Generation 2000, the Young Professional Affiliate of the Jamaica Labour Party, today characterized the Minister of Finance's Proposal to authorize deductions for student loan repayments as a short-sighted solution to a much graver problem.

"With the bureau reporting that 58 percent of graduates, who are loan beneficiaries, are unemployed and with delinquency standing somewhere in the region of 30 percent, it is clear that the Minster's proposal will not have a significant impact on the rate of delinquency” said Floyd Green, President of the Organization.

G2K noted that numerous studies, including those emanating from the Caribbean Development Bank, have shown that a lowering of the burden of repayment on the beneficiaries leads to a reduction in the delinquency rate. The organization therefore urges the government to (a) further extend the loan repayment period; (b) implement a simple interest rate of interest calculation; and (c) further reduce the interest rate.

The organization further added that any proposal for mandatory deductions should be accompanied by a stipulation that such deductions will be a fixed percentage of the beneficiaries’ salary. "Loan repayments should be capped at 10 or 15 percent of net salary to allow young professionals disposable income space to help drive economic growth” added Green.

The Organization again urged the Minister of Finance to avoid his characteristic band aid approach to the problem and to incorporate in his closing presentation the organization’s proposals, which include:

•    A re-examination of the operational expenses of the Student Loan Bureau and tertiary institutions to improve efficiency and cost saving. Entities such as the Student Loan Bureau and Tertiary Institutions should be mandated to implement renewable energy generation strategies.
•    An alignment of loan conditionalities with National Strategic goals to encourage students to pursue professions that result in job security and will inure to the benefit of the country's economic and social viability.
•    The establishment of a Private-Public Tertiary Education Trust Fund to which Nationals can make contributions and claim benefits.
•    The implementation of a widespread experience-building internship plan suitable for tertiary level graduates.

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