The Ministry of Education (Mineduc) and the Development Bank of Rwanda (BRD) have inked a deal seeking to improve services in student loans disbursement and recovery.
After signing a 10-year contract, yesterday, the Minister for Education, Papias Malimba Musafiri, explained that BRD had officially taken over the task of disbursing and recovering student loans and bursaries, while the Government will continue to select loan beneficiaries every year.
“BRD, as a financial institution, will provide students with loans on time as opposed to the delays which have been occurring. The Rwanda Education Board (REB) does not have enough capacity to deal with financial issues. This reform will cut short the previous transaction chain because BRD will transfer student loans and bursaries directly to the beneficiaries’ accounts,” he said.
The transfer of some responsibilities from the Government to BRD has come a month after the promulgation of the law governing student loans and bursaries, which explains the responsibilities of the government, financial institution and a beneficiary, among others.
While university students on the scheme are decrying delays in the bursary, Musafiri said they will access the money by next week, and that they will not face any hindrances again because BRD will always disburse money on time.
Under the deal, a student shall have the right to be granted a loan and bursary in a timely manner and to receive information about the loan they receive.
Alex Kanyankole, the chief executive officer of BRD, said the contract would strengthen higher education financing system with a vision to rely exclusively on loan recoveries in the next ten years.
The source of the funds will be the state budget, funds repaid by loan recipients, donations, grants and bequests, according to article 9 of the law governing student loans and bursaries.
Kanyankole said BRD will ensure that there is efficiency in remittance of the funds.
“Once we receive the lists we shall then process payment within a much shorter timeframe than before. The previous mode of transaction was too bureaucratic, but now the process is way shorter,” he said.
Minister Musafiri explained that after completing ones course and getting a job, a loan beneficiary is required to repay with an interest of 11 per cent.
“We call on people to start repaying regardless of the income one receives. Everyone is required to pay every month a maximum of 10 per cent of their income. We currently have less than 5 per cent of the beneficiaries repaying, but BRD will do better to recover the loans,” he said.
Musafiri noted that those who benefited from loans before the law will repay according to the contracts they had signed with the Government, adding that the task to recover these loans was also transferred to BRD.
Ismael Janvier Gasana, the director-general of REB, said some loan beneficiaries have paid in excess of the money they were supposed to repay but promised that REB would refund the over Rwf12 million paid in excess.
A fortnight ago, Gasana told The New Times in an exclusive interview that REB has so far recovered Rwf9 billion out of Rwf70 billion that was expected from 78,212 beneficiaries, leaving a task to BRD to recover more than Rwf55 billion.
He said over 3,600 beneficiaries cannot be traced and the Government could write off that debt for better planning.
Rwandan students in higher learning institutions may request for loans in the financial institution mandated by the government to pay for their tuition fees, welfare fees, or research fees while Rwandan students studying abroad may also request for loans to cover for their tuition, welfare costs, research fees, transport fees, and medical costs.