Government ordered to sort out issues threatening student loan scheme as thousands likely to miss out

Parliament has directed the government to take action on the report by the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) which exposed disparities in the selection of beneficiaries of the Student Loan Scheme.

The loan scheme has since 2014 been managed by the Higher Education Students Financing Board (HESFB) after the enactment of the HESFB Act, 2014. In this scheme, the government provides loans to students from underprivileged families so that they are able to attain university or diploma education and then repay the loans after getting employment.

COSASE which probed into the operations of HESFB in relation to the audit queries comprised in the Auditor General report for the financial year ending June 30, 2023 found that some of the districts that are predominantly poor have got few beneficiaries compared to the districts that are economically better.

Joel Ssenyonyi the COSASE Chairman reported that; “there is lack of regional balance among the beneficiaries of the loans scheme. The committee found that whereas the loans scheme was meant to aid students from underprivileged backgrounds, the vast majority of the beneficiaries of the scheme, according to the information from HESFB, were from districts which are not underprivileged. On the contrary, districts from predominately underprivileged regions such as Karamoja and Sebei were not well represented among beneficiaries”

The House then adopted the recommendation by COSASE that the loan scheme should be considered on district quota system so that the poor districts are assured of getting equal numbers of students benefiting from the scheme as the rich districts. Under this quota system, each district in Uganda is allocated the number of students to be enrolled on the scheme per year basing on the poverty index or population.

Like it is the case for the national merit students and also admissions for private students in public universities, the HESFB is also embroiled in inequalities. According the details of students who have benefited since 2014, districts with good schools have taken the lion’s share of loan beneficiaries while those with few or no A level schools have the list number of beneficiaries. Here is a look at the districts with 200 and above beneficiaries since 2014. 

Sheema 384; Rukungiri 305; Ntungamo 488; Mukono 295; Mitooma 206; Mbarara 416; Masaka 211; Luweero 250; Wakiso 525; Tororo 270; Bushenyi 330; Busia 323; Kabale 277; Isingiro 244; Ibanda 204 and Kasese 307. Meanwhile the districts with less than 30 students that have benefited since 2014 are; Karenga 2; Kapelebyong 9; Kassanda 10; Kikuube 18; Kazo 16; Kalangala 24; Kagadi 22; Kakumiro 19; Kalaki 7; Kaabong 11; Buvuma 16; Buteebo 16; Bugweri 15; Amudat 1; Pakwach 21; Nwoya 4; Moroto 16; Madi-Okolo 4; Kitagwenda 12; Kiryandongo 26; Kwania 18; Kotido 21; Zombo 24 and Terego 18.The committee recommended that the system should changed from selecting based on performance and only sciences but on District Quarter basis so that the students from poor families are taken on directly from their home districts.

The Speaker ruled that since the recommendations adopted by the House pertained an urgent need to have students enrolled on the scheme for the new academic year, the government must table a treasury memorandum in two weeks’ time so that there is no delay.

“Since students are going back to school, we would want a treasury memorandum on this report within two reports” said Speaker Among after the legislators emotionally debated the report of the committee.

Also of concern to the legislators was the revelation by the report that the new academic year 2023/24, the HESFB will not enroll any students on the loan scheme because the government has not provided the budget of Shs6b. What was provided in the budget was Shs24b to pay the outstanding areas to the public and private universities where the students already on the scheme are studying from.

Section 20 of the Higher Education Student Financing Act, 2014 provides that the eligible beneficiaries are those who need financial assistance to pursue an accredited course of study or programme of higher education in an accredited institution of higher learning that is recognized by the National Council for Higher Education. The same section provides for the selection criteria of the beneficiaries which shall be based on regional balance, gender, social economic needs, and equity.

Meanwhile, the list of beneficiaries of the scheme since its inception after the enactment of the Higher Education Students’ Financing Board Act, 2014 was laid before Parliament for the legislators to assess whether those students listed come from their Districts.

Because of this budget shortfall, HESFB on July 6 informed the country in a press released signed by Executive Director Michael Wanyama that they were not going to receive and consider any applications for the academic year 2023/2024. Wanyama however, indicated that the continuing students will not be affected by the decision.

“The Higher Education Students’ Financing Board (HESFB) informs the public that due to budgetary shortfalls, the Board will not receive applications for study loans to the Academic Year 2023/24” the press release reads in part.

While debating the report on the floor of Parliament, the legislators asked government to quickly provide the money needed to enrol new students to the student loan scheme. The students are supposed to be applying later this month after receiving admissions to either public universities or the selected private universities.

Speaker Anita Among and majority of the legislators who debated the report expressed concern that the students coming from poor families continue to be disadvantaged because they cannot compete for the government sponsorship but also fail to make it through to university through the loan scheme.

“We are putting little money into the loan system and put a lot of money into the government (sponsorship) system. The children we sponsor are children of the rich people. The rich people take their children to top schools and they are the ones who perform better” said Speaker Among.

Kalungu West legislator Joseph Ssewungu said that those benefiting from the government sponsorship on both national merit and district quarter system would not fail to pay university fees since they have been paying even more at the expensive Secondary Schools.

“The government is spending Sh70b to students from rich families and you fail to pay Shs6b for the students from the poor people” said Ssewungu, one of the education enthusiasts in Parliament.

Lukia Nakadama, the 3rd Deputy Prime Minister committed before Parliament that the government is going to provide the Shs6b so that HESFB is able to enroll new students to the scheme this financial year. Whether this will come under an urgent supplementary budget or not, was not discussed by Nakadama.

” Government is in charge and the Shs6b will be provided so that our students continue with this loan scheme especially those we are saying are coming from poor families. I am directing the Minister of Education to continue advertising and recruiting students for the students’ loan scheme” said Nakadama.

Other observations

Parliament has also recommended that the HESFB considers disbursing loans to both science and arts students so as to move in conformity with the law other than the different directives on emphasing the former.

The government was also argued by Parliament to fulfil its policy of having a public secondary school per sub-county and make sure there are Advanced Level classes and science laboratories so that the students can compete for opportunities like national merit scholarships and student loan scheme.

With HESFB only concerned with the disbursement of student loans and the recovery of the same, Parliament now wants the Ministry of Education to operationalize Section 42 (1) of the HESFB Act, 2014 so that the board is fully in charge of the all-government scholarships and grants. Currently, the Public Universities Joint Admission Board (PUJAB) has the responsibility of selecting students to join universities on government sponsorship while Joint Admission Board (JAB) considers students who are admitted to tertiary institutions for undergraduate diplomas.

The COSASE also found that the HESFB lacks an adequate policy on loan recovery hence Parliament adopting a recommendation that the new Board of Directors should quickly approve the new loan recovery policy.

According to the report, the Committee’s review of the Loan Recovery Report prepared by the Recoveries Manager for the period ending June 2022 indicated that 3,025 student loan beneficiaries owing government a total of Shs48b had completed their courses and grace period and were due for recovery over the next 10 years.

“However, it was noted that there was no approved Loans Recovery policy to guide the recovery process of the due amounts from the 3,025 beneficiaries. The draft policy has been in place since 2019 /2020 but had never been approved by the Board and hence cannot be used as a guide for recovery operations” the report adds.

Concerning students who have gone through university, it was reported on the floor of Parliament by Fredrick Angura the Tororo South MP that some of them are failing to secure jobs in order to start paying back the loans because universities continue to hold onto their transcripts.

“I received a call from a student who completed and graduated and is looking for opportunity to work and start paying his loan. Unfortunately, he cannot access his transcript. All Accounting Officers of universities are facing a problem on NTR (non-tax revenue) which is a result of government not remitting funds” said Angura.

In response, Nakadama directed the Ministry of Finance and the Ministry of Education to present a statement to Parliament next week concerning the fate of students who graduated but their transcripts cannot be released because of government’s delay in paying their tuition to the implementing universities.

Background

Since 2014, at least 12771 students drawn from across the country have benefited from the Higher Education Student Loan Scheme whose initiation was aimed at helping children of underprivileged families attain university education.  This represents 35 percent of the 36261 students that have applied for the student loan scheme since its inception.

By the time of the Audit report was presented to Parliament in January this year, HESFB had debts amounting to Shs15.33b part of which was supposed to be disbursed to beneficiary institutions.

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