Funding Tertiary Education- The Role of the Students' Loan Bureau
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Transcript of Funding Tertiary Education- The Role of the Students' Loan Bureau
STUDENTS’ LOAN BUREAU
Funding Tertiary Education – The SLB’s Role
Presented by : Analisa Allen
February 25, 2014
OVERVIEW- STUDENTS’ LOAN BUREAU
The Students’ Loan Bureau (SLB) is the only institution in Jamaica primarily geared towards the provision of tuition loans for tertiary education- est. in 1970 under the Students’ Loan Fund Act
The SLB operates a Revolving Loan Fund, which is used to fund tuition loans to eligible students.
Most loans are issued based on need, assessed through a Means Test.
Grants are also offered.
OVERVIEW- STUDENTS’ LOAN BUREAU
Mission Statement:“To provide affordable financial assistance
through a sustainable revolving loan fund to students in need who are desirous of pursuing
tertiary education, thereby contributing to social mobility and nation building.”
Tuition Loans only
STRUCTURE – STUDENT LOAN PRODUCTS
Loan Products offered by the SLB :
Targeted Loan ( General Loan for undergraduate study)
Parent Plus Loan (For undergraduate study )
Post Grad Loan ( For postgraduate study)
STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN Students between the ages of 16 - 50
Those who are eligible for tertiary education but unable to finance their higher education (full tuition)
Those who are able to only fund part of their tuition but still considered vulnerable
Jamaican citizens
Persons who have applied to or attending an Approved Tertiary Institution (ATI) in Jamaica or the region*
STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.
Interest Calculation: 9% add on per annumA method of calculating interest whereby the interest payable is determined at the beginning of a loan and added onto the principal. The sum of the interest and principal is the amount repayable upon maturity.
STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.
Repayment Period:
Repayment commences the January following the completion of the course of study*
Courses of study with the average tenure (3-4 years) : 15 year loan tenure (from commencement of programme until loan maturity) (increased in 2012 from 10 years)
Courses of study with longer tenure(5 years): 20 year loan tenure (from commencement of programme until loan maturity)
Payments in moratorium
STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.
Repayment Period: Loan payments become due on the first of each month Grace Period – to the 10th of the following month Late fee: $500 per late payment (currently)
STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.
Repayment Period- Assistance to those who are facing difficulties in repayment: Restructure of loansGraduated Payment plansDeferral of loan payments
STRUCTURE – STUDENT LOAN PRODUCTSPARENT PLUS & POST GRAD LOANS
Parent Plus Loan: Undergraduate StudyMaximum of $500,000.00 per loan Repaid monthly via salary deduction – maximum 36 monthsInterest rate 9% add on per annum
STRUCTURE – STUDENT LOAN PRODUCTSPARENT PLUS & POST GRAD LOANS
Post Grad Loan:Post Graduate StudyMaximum of $1,200,000.00 Repaid monthly via salary deduction – maximum 36 monthsInterest rate 9% add on per annum
SLB VS STUDENT LOANS IN OTHER TERRITORIES
Structure SLB Barbados Canada
Collateral N/A * *
Guarantors * * *
Repayment Period
15 years 20 years
Between 5- 12 years depending on the amount borrowed
Standard 10 years
Interest rate 9% 4% + 5%, or + 2.5% or Newfoundland and Labrador and Prince Edward Island are
the only provinces where there is no interest on the
provincial loan
Method of calculation Add on
basisVariable Interest
rate
Students have the choice of opting for a fixed interest rate of prime interest rate + 5%, or a floating interest rate of prime interest rate + 2.5%.
SLB VS STUDENT LOANS IN OTHER TERRITORIES
Structure SLB Barbados Canada
Monthly Payment -
Flat payment
Flat payment
Income Contingent
Bonding N/A * N/A
Grace Period Maximum of 6 months
Determined by a committee if loan was taken for full time study and 6 months if loan was taken for part-time study
Dependent on issuing body
GROWTH IN LOAN DEMAND
Loan demand has increased at an exponential rate – especially over the last 7 years .
This has resulted in significant increase in disbursements by SLB over the 7 year period.
Total applications received for 2012/13 total 16,676 or 23% over the previous year; for 2013/14 applications 15,300 or 8% less.
Despite this reduction, actual disbursements are projected to increase from $3.6mn in 2013 to $4bn in 2014.
DEMAND FOR STUDENTS’ LOANS: 2007 - 2014
Table 1
Loan Demand/Approved and $value Disbursed 2007/8 to 2013/14
2013/142012/13 2011/1
22010/11
2009/10
2008/9
2007/8 Change2007 – 2014
$/# %
# Applications received
15,300 16,676 13,600 9,973 8,738 7,516 6,600 8,700 132%
# Applications disbursed/ projected
12,800 13,000 12,100 9,899 8,623 7,447 6,467 6,333 98%
Value of loans disbursed (projected) - $mn
$3900
$3600 $2,750 $2,010 $1,598 $1,101
$840 $3,060 364%
Tuition Fees$000 305 277 227 203 185 148 130 175 135%
MAJOR FACTORS IMPACTING DEMAND
Growth in the number of students enrolled in Tertiary institutions
Increase in the number of applicants for students loans (30% of enrolled students currently funded by SLB).
Annual Increase in tuition fees charged by institutions.
MOVING FORWARD
Increased funding Reduction in delinquency level Change in legislation Public / Private Partnerships Individual Savings Credit Bureaus
CONCLUSION