Lawmakers approve Bill on varsity study loan financing

A proposed law that seeks to govern students’ bursaries and loans in post-secondary education and thus ease recovery process, yesterday, received the green light from the Lower House. The new draft law essentially enables the government to channel university student loans through a bank and set up mechanisms to ensure that beneficiaries who have completed their education pay back their loans upon getting jobs. Under the legislation, students studying in Rwanda may request for loans in the financial institution mandated by the government to pay for their tuition fees, welfare fees, or research fees. Rwandan students studying abroad may also request for loans in the financial institution to cover for their tuition, welfare costs, research fees, transport fees, and medical costs. Students of IFAK Secondary School. The new draft law seeks to streamline post-secondary school loan application as well as recovery process. ‘A welcome decision’ The Minister for Education, Dr Papias Musafiri, welcomed the development after yesterday’s session in Parliament, telling journalists that the legislators had just given government permission to go ahead and implement their plans on managing student loans. “It is good that the MPs have fast-tracked the passing of this law. It will make it possible for us to implement plans that we have to facilitate students to acquire loans and bursaries,” he said. According to the draft law – that now awaits a presidential assent and subsequent publication in the Official Gazette – a bursary is a non-refundable amount disbursed by the government through a competent organ for students in higher learning institutions in Rwanda or abroad pursuant to the relevant government policy. MP Juvenal Nkusi asks a question during the session. When it comes to study loans, students will be eligible to access government loans after considering whether they will be studying courses in the priority areas of study identified by the government, their academic performance, as well as their financial standing in line with the social stratification programme, Ubudehe. Article 9 of the draft law on students’ bursaries and loans states that: “Every year, the Minister in charge of education determines a list of priority courses needed in the country and the available budget allocated to loans in higher education, thereby submitted to the financial institution.” The criteria for selection Under the draft law, the public higher learning institutions, after admitting students, will submit the lists of new eligible students to the Ministry of Education. The ministry, through a committee composed of four representatives of the Higher Education Council and three representatives of the University of Rwanda, would then select students to be considered for the varsity study loan and submit the lists of the selected students to the financial institution mandated to offer student loans. Students pursuing priority courses in private higher learning institutions are eligible to apply for a student loan through the Ministry of Education and, if they fit in the selection criteria, their names will be sent to the financial institution to get their loans. Article 10 of the draft law states that the source of funds for student loans will comprise of the government’s budget, funds repaid by loan beneficiaries, donations and grants, funds from the implementing financial institution, lines of credit negotiated by the financial institution, as well as a higher education saving scheme to be established by the financial institution. Loan repayment Given that the government seeks to have the student loan fund to be self-sustaining within 10 years, a mechanism that will make it possible for students to repay back their loans upon getting jobs, has been put in place. Minister Musafiri said an integrated information management system will be set up by the mandated financial institution to follow up the students so they can pay back the money. Education Minister Dr Papias Malimba Musafiri (L) together with the Deputy Speaker of Parliament, Abbas Mukama listen to questions from Members of Parliament during the session yesterday. (All photos by Timothy Kisambira) But the law on students’ bursaries and loans also stipulates what both students and their employers will have to do to ensure that the study loans are paid back with an interest rate fixed by the Ministry of Education in agreement with the financial institution mandated to offer the study loans. Article 17 requires beneficiary employees who have loans to repay to notify their employers that they were study loan beneficiaries and that they agree to pay back the loan by deducting from source. The employers would then declare in writing any employee who has the loan to repay to the financial institution in a period “not exceeding one week” from the date the employee started work and then deduct the dues and pay them to the financial institution. There are also penalties for employers who will not report their employees to the financial institution. Under Article 24 “in case the employer does not declare to the financial institution the loan beneficiary after their employment, the employer shall be punishable by a monthly penalty of 10 per cent of the loan the employee would have repaid.” Article 25 states that in case an employee who has the loan to repay does not notify the employer that they are a loan beneficiary, they will be punishable by a monthly penalty of 10 per cent of the loan amount to repay. “If this system works well, there is no way the students will fail to pay back their loans,” Dr Musafiri said. Following yesterday’s unanimous passing by the Chamber of Deputies, the Bill governing bursaries and loans granted to students will be sent to the President’s Office for assent. Dr Musafiri said he hoped the law will be able to regulate the offering of study loans to about 12,000 students who will join university in a few weeks time. editoria@newtimes.co.rw

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Lawmakers approve Bill on varsity study loan financing