The SLB is seeking to collect some $1 billion which it is owed and the amnesty is being offered to SLB beneficiaries whose loans have matured in addition to those whose loans have not matured but are in arrears.
Under the amnesty, the institution has waived all late fees, provided relief on a percentage of the insurance cost and the accrued interest on loans in arrears.
When the amnesty took effect on March 1, 2011, however, the SLB cautioned that it would start an aggressive campaign at the end of the reprieve in order to collect the outstanding debts.
As the initial amnesty period, (1st March – 31st May) drew to a close, delinquent loan beneficiaries made payments of just under $40 million with some 301 delinquent borrowers coming forward to pay off their loans, while 17 persons have come in to make arrangements to regularise their loans. In addition, the SLB noted that close to 500 delinquent borrowers have indicated their intention to source funds in order to close their accounts in short order.
At the launch of the initial amnesty period, Acting Executive Director of the SLB, Monica Brown, observed that if the response to the amnesty was as expected, the bureau would use the funds to defray interest payments on a $1.7 billion (US$20 million) loan from the Caribbean Development Bank (CDB).
Ms. Brown suggested that the money collected from delinquents might also be used to supplement the expected budget of just over $2 billion to fund new loan applications for the 2011/12 academic year. More than 11,000 applications are expected for the new academic year.
For the 2010/11 academic year, the SLB received some 10,000 completed applications, of which, some 9,000 were approved for loans totalling just over $2 billion. The Bureau’s loan portfolio is some $6.9 billion with a delinquency rate of just over 18 per cent amounting to approximately $1.1 billion.
Data up to the end of the 2010 academic year showed that of the 35,000 loans at the bureau, 3,400 were in arrears for periods ranging from 30 days to more than three years.
In order to ease the burden, Finance and Public Service Minister, Audley Shaw, announced critical modifications to the loan policies of the SLB.
Effective 1st April, the interest rate was reduced from 12 per cent add-on to nine per cent and the lengthening of the repayment period from 10 to 15 years. Loan Beneficiaries are also to benefit from a reduction in insurance premiums from $1.50 per $1,000, to $1.00 per $1,000. This is significant as in some instances, insurance cost represents more than 40 per cent of the total monthly payment.
The SLB began operations in 1970 and was incorporated in 1971 as a statutory body under the Students’ Loan Fund Act to administer the Students’ Loan Fund.
The SLB is a self-financing public body and its main function is to disburse loans covering 100 per cent of tuition to Jamaican nationals to facilitate and enable their socio-economic mobility through tertiary education and training.
The objective is to provide an educated Jamaican workforce and the enhancement of the nation’s human capital formation.
(Parts of this article were written with content submitted in a JIS press release)