Beneficiaries of government study loans have responded with mixed reactions to the Rwanda Education Board (Reb’s) plan to work with the Credit Reference Bureau (CRB) to sanction defaulters.

While some described the move as ‘disastrous’, others welcomed it, saying it will compel defaulters to service their debts and improve recovery efforts.

The move follows reports that out of Rwf70bn debts, only Rwf6bn has been repaid since 2007. About 11,000 people have paid, out of 66,750 beneficiaries.

The aim of Reb’s move is to reduce debt default and boost collection efforts.

CRB normally collects borrower’s credit history from participating financial institutions which is then used as a point of reference for lenders to decide whether one qualifies for a loan.  It helps to check non-performing loans in commercial banks.

A bad loan affects the credibility of the borrower.

This implies that beneficiaries of education loans will find it difficult to acquire a loan once they are blacklisted on list of people with non-performing loans.

Speaking to The New Times on Friday, Louise Karamaga, Reb’s deputy director in charge of High Education Students’ Loans said all employers have up to February 28, to declare the names of the scheme beneficiaries.

After the deadline, beneficiaries who will not have completed forms committing to pay will be listed as defaulters and their names sent to the Credit Reference Bureau. Efforts to contact CRB to confirm whether they had discussed the matter were futile.

But under the 2008 Rwandan student bursary/loan policy, beneficiaries are supposed to start paying back upon finding a job.

The same policy requires everyone who benefited from the government student loan since 1980 to pay back 100 per cent with a 7 per cent interest of all the money (tuition fees and living allowances) they received as scholarship.

Reb has appealed to people to clear their debts but with little success, which threatens the institution’s ambition to create a revolving fund for more scholarships.

"They must pay back to enable government support other Rwandans acquire tertiary education,” Karamaga insisted.

 The loan recovery rate in Rwanda is at 8 per cent, which Karamaga said is very low compared to Kenya, where it stands at 60 per cent.

Kenya’s Higher Education Loans Board (HELB) engages both employers and employees, whereby upon getting a job, an employee informs the Board.

The employer also commits to deducting the money. Karamaga pointed out that failure to recover the loan undermines chances of sponsoring more students.

He said they considered using CRB after several awareness meetings with private and public institutions and Rwandan embassies about the recovery process.

One of the approaches to be used to have the people pay the money is to send their data to Credit Reference Bureau – if this doesn’t work as planned, then the law will take its course, she warned.

Apparently, Reb has put data into a Management Information System, which helps to track the records of every debtor.

Charles Karegeya, who is in charge of sales and loans at Kenya Commercial Bank, said this tracking policy can be effective once students’ loan is tied to a bank loan.

Beneficiaries react

However, Emelyne Mukamana, one of the beneficiaries, said enlisting the services of CRB was not the best solution.

The 28-year old who graduated from the University of Rwanda’s College of Science and Technology (former KIST) said Reb should step up awareness campaign instead of labeling people defaulters.

 Edouard Rukundo, another beneficiary, said blacklisting people was uncalled for.

"Reb can work with the Labour ministry to ensure compliance than working with CRB because the ministry is in charge of public servants,” he said.

Another beneficiary said going to CRB was a ‘disastrous’ approach.

"I doubt whether there was a rigorous awareness campaign by Reb. I personally do not know where to pay and how,” she said.

When Reb embarked on a campaign to recover the money, about six years ago, prominent personalities, including the Ombudsman and former Chief Justice Aloysia Cyanzaire, Education minister Vincent Biruta, Senate president Jean Damascène Ntawukuriryayo and his deputy Bernard Makuza (then prime minister), were recognised at the launch of the campaign for repaying their scholarships.

At the function some people signed dummy cheques promising to pay.