The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Thousands of delinquent student loan borrowers were yesterday urged to stop being “selfish” and repay their debts, the Chamber’s chairman warning that they were denying other Bahamians the same opportunity.

Gowon Bowe, speaking after the Government revealed that a combined $155 million in principal and interest is owed to the Education Loan Authority (ELA), called for the Bahamas to “more efficiently” use the money it spends on education.

Mr Bowe said his “first cause for concern” was the sum said to be due to the ELA, as he believed it was only authorised to lend a maximum $100 million to student borrowers.

Jerome Fitzgerald, minister of education, said on Monday that the ELA had 4,300 outstanding loans, accounting for a delinquency rate of about 75 per cent.

About 4,733 loans have been issued to date, and of that number, 16 per cent are up to date on their payments; 8 per cent are up to 270 days outstanding; and 76 per cent are 271 days or more behind on their payments.

“Unfortunately, it indicates a certain level of selfishness on the part of young Bahamians afforded the opportunity to go abroad and carry out studies,” Mr Bowe told Tribune Business.

“The only way a programme like that continues is if young persons who are successful and return home pay back the proceeds they receive.

“We should say to these students that they would not have been able to go abroad if not for someone else’s funding, and if they’re successful they should make every effort to pay back the loan as quickly as possible to give others the opportunity to go abroad.”

The ELA programme was started by the 1997-2002 Ingraham administration as a way to make tertiary education - college and university studies - more affordable and accessible to lower income and middle class Bahamians.

While it was created with the best of intentions, Mr Bowe yesterday said it had been “poorly managed”, with loans not based on a proper financial basis. They also lacked the proper controls and checks and balances.

“The initial year under one administration, they issued about $33 million in the first tranche,” the Chamber chief added. “The actual capacity in terms of what could be issued was exhausted very quickly.”

With many borrowers seemingly treating credit from the ELA as a grant scholarship (free financing), rather than a loan that had to be repaid, Mr Bowe said the Authority’s ability to continue as a going concern has now been jeopardised.

It has relied on the Government repaying some of the delinquent balances to continue extending student loans, but Mr Bowe said this has now become unsustainable without more borrowers becoming current on their payments.

The end result is that the Bahamas’ ability to develop its human capital resources has been impaired, at a time when it desperately needs to improve workforce productivity and eliminate so-called ‘skills gaps’ that force it to rely on imported labour.

“Given our skills gaps as a nation, what we want is the efficient use of resources to best educate our people,” Mr Bowe told Tribune Business. “The key objective is to ensure we have an efficient use of funds in education.

“Certainly, the inefficient use of resources in terms of providing funding for students to go abroad is concerning, as we are not getting the biggest bang for our buck.”

The Chamber chairman said he understood that the Bahamas’ education spending per capita was among the highest in the Caribbean, but it was not “getting the returns and results” for this outlay, based on high school graduation rates and exam results.

Suggesting that administrative costs were taking resources away from front-line education, Mr Bowe added: “It’s critically important now that we really get to grips with the roots of our education demise.”