EDITORIAL: There is need to rethink study loan recovery strategy

Development Bank of Rwanda (BRD) has its work clearly cut out as it starts handling the university student loans. This follows revelations by Rwanda Education Board (REB) that it cannot trace thousands who benefitted from the scheme. That means the government might consider writing off billions of francs in study loans after failing to trace 3,635 beneficiaries with REB arguing that cancelling the debts is good for planning. REB officials say the majority of those who cannot be traced benefited from the loan scheme between 1984 and 1994, saying they could include victims of the 1994 Genocide against Tutsi, or those in exile or in prison. As BRD takes over the university study loan scheme under a new legal framework, however, it is clear that more homework is needed to safeguard against a recurrence. Already, the bank now has to recover over Rwf50 billion from former beneficiaries, which could be the ‘litmus’ test, especially on its capacity to manage the scheme. This case has brought to the fore the need for clear procedures for loan disbursement and recovery. It has also highlighted the importance of information management and record keeping. What happened to information details of those who got the loans in last decade and haven’t paid a dime? Why is it that students who graduated 7-10 years ago are not repaying their loans? Is it because they cannot be traced or does the recovery system have major loopholes? So, as BRD takes over the scheme, it will need to find answers to these and more questions if the scheme is to serve its purpose and become sustainable. It will also help ease pressure on government coffers as the scheme will be largely refinanced by repayment from former beneficiaries. The bank needs to work with all stakeholders, including local leaders, universities, employers, among others, if they are to succeed in this effort.

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EDITORIAL: There is need to rethink study loan recovery strategy