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‘Pay Back Student Loans - Or Face Court’

Minister of Education Jerome Fitzgerald discussed emails involving Save the Bays in Parliament last year.

Minister of Education Jerome Fitzgerald discussed emails involving Save the Bays in Parliament last year.

By NICO SCAVELLA

Tribune Staff Reporter

nscavella@tribunemedia.net

THE Education Loan Authority (ELA) is owed over $100m in outstanding loan payments for its student loans cheme, Education Minister Jerome Fitzgerald said yesterday.

He has urged borrowers to arrange repayment methods or face court action.

Mr Fitzgerald said the authority, which has assumed full responsibility for the loan scheme, is owed $155m in loan payments - principal and interest included.

That represents approximately 4,300 outstanding loans, accounting for a delinquency rate of approximately 75 per cent amongst borrowers. Approximately 4,733 loans have been issued to date, he said.

Additionally, of that number, 16 per cent of borrowers are up to date on their payments, eight per cent are up to 270 days outstanding, and 76 per cent are 271 days or more behind on their payments.

As a result, Mr Fitzgerald said he has instructed the ELA to take court action “if and when necessary” to collect the outstanding funds. However, Mr Fitzgerald urged persons to work with the ELA to come to an “accommodation that works for both sides.”

He also said the ELA has established an incentive programme that will empower the authority to not only collect outstanding funds, but reward borrowers who are up to date on servicing their loans as well as “formulate negotiations with persons requiring special consideration.”

“We of course are hoping that we don’t have to take anyone to court; that is why we have come up with an incentive plan that we think will be able to accommodate just about every type of borrower that we have identified,” he said at a press conference yesterday.

“Having said that, there are persons who, for one reason or another believe that they can have and receive government funds in this circumstance where they signed for a loan, and not repay. And the point is those persons who have that belief, we will take them to court in order to recoup the money.”

He added: “We are realistic in our approach; we understand the set of circumstances we face in our country. But we just don’t want people to think that they can just shy away from their responsibility after receiving government funds.”

Notwithstanding the threat of court action for persons who have defaulted on their loans, Mr Fitzgerald said his ministry, along with ELA officials, has established a student loan repayment Incentive programme to help secure the outstanding funds.

This involves the establishment of a 12 month period of “incentives and waivers” from March 1 to assist and encourage delinquent borrowers to repay their loans. This will be an interest-free period, during which no interest will be applied to loans, Mr Fitzgerald said.

Secondly, borrowers who wish to pay off their loans during that 12-month period can settle their loans by repaying the principal only, and all interest and related charges will be “forgiven.”

Other features of the programme include the application of the full loan payment (interest and principal) to the principal balance only during the 12-month period and subsequent matching of that amount by the ELA via “debt forgiveness,” as well as the “forgiving” of 1.5 times the loan payment if persons restructure their loans during the 12-month period. In the latter instance, the loan payment on the restructured amount (principal and interest) will also be applied to the outstanding new principal balance.

Mr Fitzgerald also said education officials are working with the Ministry of Labour to develop a work programme, which will include tutoring, mentoring or other services in the public service for borrowers and co-borrowers who are unable to pay their student loans at this time.

This will allow persons to perform a national service to decrease their loans by a maximum of 25 per cent.

“We know unequivocally that this programme can benefit thousands of additional Bahamians and we wholeheartedly believe in the transformative power of education,” Mr Fitzgerald said. “However, it requires the collective cooperation of those who have already gained an education from the programme to meet their financial goal obligation.

“With this reasoned and prudent approach, we, that is my ministry and the authority, anticipate the possibility of restarting the loan scheme at the earliest opportunity.”

The loan programme was established in 2000 to assist persons pursuing tertiary education either locally or abroad, Mr Fitzgerald said yesterday.

However, it was suspended in August 2009 due to its high delinquency rate.

Comments

banker 3 years ago

Well, if the PLP didn't go about destroying jobs, then perhaps students could repay their loans. I feel sorry for all of the employable students with COB degrees and no work.

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Publius 3 years ago

Yes, this is a factor but the truth is that many simply refused to pay the loans back under both the FNM and the PLP, feeling that since it was a government loan, nothing would happen to them if they refused to make payments.

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themessenger 3 years ago

They might also be thinking that since government ministers , families and cronies don't pay back the millions they owe to BoB and Real Property and Business License why should they be held accountable? Oh I forgot, some people are more equal than others.

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TalRussell 3 years ago

Comrade Minister I did have some misgivings why many consider you one of the worst PLP cabinet ministers when it comes to being a magnet for attracting lots dislikes. Careful cuase you just might have overshadowed V. Alfred?
How in the hell did you skip right pass the PLP's, with the big outstanding bad loans they have never even attempted to repay the financially challenged Bank of Bahamaland?
You skipped over the deadbeat PLP's to clear a pathway for threatening the student loan recipients with court action. I can only wonder how many big shot PLP's,still owe their old student loans?
Wow, excellent public relations you brings to your PLP party, as they prepare to gear up for the 2017 General.

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