Banks, this is your opportunity!

Can I tell you what the greatest news I heard every single month was when I was a student at the National University of Rwanda? It wasn’t that I had passed an exam or anything important like that; the best news I heard was the “bourse has arrived”! That news was extremely exciting, more especially when it arrived on Friday. If it did, it meant that I, along with the entire student body, was going to enjoy a weekend of revelry and mischief. However, don’t think for one moment that this money was simply blown. We’d first paid our rent, our food, all our debts and only then would the remainder be used in the town discothèque. You’d think that we’d get a hefty amount just by the way we squeezed everything out of it, but the reality is that the monthly stipend was a little over twenty-two thousand francs. Honestly, I really don’t know how some people did it. I had a little income stream on the side that helped me balance my books but for those students that didn’t, drastic measures had to be taken. I saw situations where students had only one proper meal a day, where two students shared a single-bed and where students chose not be buy ‘luxuries’, such as deodorant. I even heard stories about how some students had dependents at home and send portions of their bourse money to support them. In all honesty, that wasn’t the way anyone should have had to live. But because many students didn’t have any other option, the tiny bourse was the only way they could survive through their university years. Well, these very students are probably in shock now that the Ministry of Education has revealed that, effective next year, the monthly stipend will be scrapped. While this will give many people the shivers (a lot of businesses in Butare earned their entire income from students’ bourse) I think that this is a huge opportunity for commercial banks and other financial institutions. In many other countries student loans aren’t given by the government but rather by commercial banks. These banks have a department that strictly deals with student loans and financing. These banks look at the applications and then give the loan based on the students ability to pay. What makes this easier for the banks to issue a loan is the fact that the government backs these loans. What this means is that if the student isn’t able to pay the loan back, for example, he/she passes away, the government pays the banks. Very often these loans have a very small interest and students are able to pay them back over a few years. I will not pretend to be an expert at the entire student financing business, but I think that it is beneficial to everyone if as many young people get a university education. It’s beneficial to the banks because, very often, the bank that a student uses is the very same he/she will continue to use when they get a job. Therefore, the bank is able to continue selling its financial services to the client over a long period of time; I’m talking about home mortgages, overdrafts and simple loans. The fact of the matter is, the more loans a bank makes, the more money a bank makes. Rwanda dreams of being a knowledge-based economy. The simple fact of the matter is that this type of economy will not come to fruition without a critical mass of highly educated people. So, while the emphasis is rightly on primary and secondary education, high school graduates won’t drive the economy forward by themselves, it will be with the support of the university graduates. So, it is in the governments own best interests to make sure that the best and brightest have an opportunity to enjoy a university education. That is why it must be willing to a underwrite commercial student loan scheme. Underwriting one isn’t as expensive as just giving each and every university student money. Speaking as a former student, I’m sure that they will certainly enjoy the opportunity to negotiate the amount of student loans. So, instead of living impossibly on twenty thousand francs, they will be able to get more or less, depending on their need. This is a win-win situation for all. I can only hope that a scheme like this one will be ready in time for the next academic year. sunnyntayombya@newtimes.co.rw

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Banks, this is your opportunity!