TRACING WHEREABOUTS of beneficiaries of student loans who defaulted remains a challenge despite a law governing their recovery, officials from Development Bank of Rwanda (BRD) have said.

Fred Mugisha, senior manager of education financing at BRD, said, currently, only 14,100 loan beneficiaries are repaying, out of the 60,000. Some 3,700 have completed servicing their loans.

Officials say the process of recovery is hampered by the fact that most employers do not report the identities of former beneficiaries employed either in public and private institutions.

However, Mugisha said that with the mechanisms stated in the law governing student loans and bursaries, and those put in place by BRD in cooperation with stakeholders, locating the beneficiaries is possible.

A loan beneficiary is required to repay 100 per cent of the tuition fees (currently Rwf600,000 per year) multiplied by years of study and annual living allowances (Rwf250,000 per year) plus an interest of 11 per cent of the total loan. 

BRD has embarked on a media campaign to remind employers to submit to BRD a list of their staff who benefited from the student loans scheme. 

The bank wants employers to take the lead in facilitating their employees to replay the money.

"Employers have to help in identifying their employees who benefitted from the student loan scheme. This is a duty provided for by law,” Mugisha said. 

According to the law, the loan recipient has the obligation to repay the loan, and are required to, within seven working days of their hire date, inform their employer in writing of having benefited from such a loan. 

The employer must also, within seven working days of the loan recipient’s declaration of having benefited from a student loan, inform the financial institution in writing that the employee has benefited from the loan scheme.

Deductions should then be made from salaries. 

"The legal framework of the student loan scheme already exists, and lawful debt recovery measures will be taken for willful defaulters. These measures include mainly administrative sanctions, penalties and legal actions,” Mugisha warned.

Beneficiaries speak out

Former beneficiaries who spoke to Saturday Times said they are not against repaying the loans but questioned the way they are required to pay.

They said when they acquired the scholarship, some did not sign any contract with anybody and were not consulted even before the payment policy was put in place on how to pay and the interest rate imposed.

"What they are doing is illegal and the issue is not pushing employers to report those who benefited from the loan but the basis. Do we have a contract with the government? Was our consent sought before signing and did we agree on the terms of payment? And where did they get that interest rate of 11 per cent?” wondered one of beneficiaries, a lawyer who preferred anonymity in order to speak freely.

The lawyer said the amount of money was made standard yet, in actual sense, the figure varied from one university to another and from faculty to faculty.

"For insistence, we studied when tuition fees was Rwf300,000 and it is not clear how I am supposed to pay Rwf600,000. I think BRD should release the list of beneficiaries and how much each should be paying other than encouraging us to go to them to check for ourselves,” he said. 

Another former beneficiary, who only identified himself as Kabano, said: "Actually, they used to say the bursary was free and a reward for best performers. I will pay if they make things clear and consult us other than imposing on us a policy.” 

"There was no proper system then, so I don’t think the blame entirely falls on the students. The Government should bear with the circumstances,” said another beneficiary, who only identified herself as Liliane.

Employers speak out

John Kanyambo, a human resource management specialist at the Ministry of Service and Labour, said it is still difficult for employers to locate employees who benefited from the scheme.

He suggested that in the case of public employees, there should be a way to link former bursary beneficiaries to the Integrated Payroll and Personal Information System (IPPIS) to easily identify them and ease the payment process.

"It is not easy for public service employers to track former student loan beneficiaries unless the Ministry of Education provides a list of all beneficiaries to the Ministry of Public Service and Labour to know how many are employed in public service and link them to the IPPIS,” said Kanyambo. 

Private Sector Federation (PSF) chief advocacy officer Gerard Nkusi Mukubu said mobilisation was only made at the secretariat level and those who benefited from the scheme are now paying.

"PSF and the public service have good collaboration and we can help in looking for possible and efficient ways to mobilise people in the private sector so those that those who benefited from the scheme start paying,” Mukubu said. 

Olivier Bahizi, the human resource manager at Musanze District, said: "We find it difficult to identify those who benefited from the loan scheme, but most of our employees are paying and we are trying to identify those who joined the district recently.

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