Student Loans in Ghana: The Way Forward

STUDENTS LOAN IN GHANA: THE WAY FORWARD

The 2005 Students Loan Trust Fund, which was established in December under the Trustees Incorporation Act 106 of 1962, was mandated to provide financial resources and sound management of resources for the benefit of students.

This injurious scheme, which replaced the SSNIT loan with compound interest of 12% of average monthly Government of Ghana 182-day Treasury bill rate( applied on the loan), was not favourable to students that depended on them.

Per the Chief Executive’s Report of the SLTF Annual Report of 2007, GH¢6.2 million was disbursed to 13, 835 students in 43 institutions including 13 public Universities and other institutions, 10 polytechnics and 20 private Universities and Colleges.

The number of students that benefited from the loan, as stated above, is far less than half the population of University of Ghana Students alone. This means that there are major problems with the new scheme therefore students try hard to shy from it.

Rather than considering the scheme in a holistic and a more comprehensive manner to salvage the present poor state of students, the SLTF Board resorted to the introduction of the infamous Student Loan Protection Scheme.

The Student Loan Trust Fund Board met student leaders from The Private Union Students Association of Ghana (PUSAG), The Ghana National Union of Polytechnic Students(GNUPS) and The National Union of Ghana Students (NUGS) during what was dubbed “Briefing on the Student Loan Trust Fund’ on 9th February, 2010 at the Conference Room, Ministry of Education.

From all indications, all the Student Representatives present showed their disapproval of the scheme. The purported scheme was news to the various Student Leaders present at the briefing and was not convincing at representing the interest of the Ghanaian student. Indeed the Ghana News Agency Report on Ghana web clearly photocopied the disapproval of student representatives and can be verified on the website.

It is surprising therefore that fourteen days after the said meeting, the NUGS President, in a publication on Ghana web, made no mention of the Student Loan Protection Scheme (an issue of great and grave concern to students in Ghana) but rather paid tribute to the ever existing delay in the loan.

In Zimbabwe, students enjoy (among other loan schemes) the Federal student loan which is the Student Loan Network and one of the nation's fastest growing providers of students’ loan and education information. Since 1998, the scheme had connected over 25 million students and parents with more than $1 billion. Federal student loans have a fixed interest rate as low as 5.60%. Both the Stafford loan and PLUS Loan can pay for tuition and other school expenses. Alternative student loans allow students to borrow up to 100% of the cost of attendance.

In Nigeria, the Executive Secretary of Nigeria Students Loan, Mr. E.J Achuta, wrote a paper which briefly reviewed the current patterns and problems of financing higher education in Nigeria, the evolution and administration of students’ loan scheme and the possibility of the present loan scheme metamorphosing into an Educational Bank. It is appetising and worth noting that out of the twenty nine Universities in Nigeria, there is free tuition for all the twenty one Federal Government Universities for undergraduate students.

In South Africa, citizens may be eligible for a National Student Financial Aid Scheme (NSFAS) loan for study at one of the country's public higher educational institutions. Much of an NSFAS loan can be converted into a bursary, which does not then need to be repaid, depending on one's academic progress.

Many South African companies offer bursaries to promising students. The terms of these bursaries vary tremendously. Contract bursaries require you to "pay back" the bursary by working at the company once you've completed your degree - giving you a job and work experience immediately after your graduation. Many mining and engineering companies, in particular, provide contract bursaries.

All of South Africa's major banks offer student loans, both to South Africans and to non-South Africans with valid study permits. Bank loans, unlike NSFAS loans, also cover studies at a private institution.

The Students Loan Trust Fund Board, as a matter of urgency, must stop the deductions from the meagre loan in the name of Student Loan Protection Scheme, and source for money to meet the current problem of the ever increasing needs of students and review the compound interest rate in order to find one that would be favourable to the students of Ghana. This can be done when all the stakeholders in education are consulted to find a lasting solution to these problems.

The Government of Ghana is called upon to make allocation of at least 1% of the monies that would be generated in the Petroleum sector as a Petroleum Fund to support education in the country. Parliament, in passing the Petroleum Bill, should consider education and youth development as an integral part of the petrochemical industry and the development of the local content of the bill should be appreciable to safeguard posterity from mar.

The youth, especially the Ghanaian student, deserve to be accorded a lot more attention and opportunities than they are receiving presently. Our ability to harness this tremendous potential will determine our strength and resilience in pursuing our social, economic and political development goals.

By: Maxwell Klu

Local NUGS President

University of Mines and Technology-Tarkwa

Maxckenzy2001@yahoo.co.uk 0249554990