Saying that any move to bar University of Guyana (UG) student loan defaulters from leaving the country would be illegal, President David Granger yesterday emphasised the need for more persuasive measures to be used to ensure repayments.
“It [unpaid loans] is a problem and as I said I understand the minister’s frustration but banning people from leaving the country… is not provided for in the law,” Granger said in a pre-released recording of the ‘Public Interest,’ which will be televised tonight.
Granger was asked whether defaulters can be barred from leaving the country and if he would lend support to such a method being used to recover state funds.
“I do not believe that the Minister of Finance’s remarks are supported by the law. In that regard, I am obliged to take the side of the law. If it is not lawful, it can’t be enforced. There must be other measures which we must rely on to get students to repay their loans. There must be other sanctions,” Granger said, while noting that comments have been made by the ministers of Citizenship and Foreign Affairs.
His comments came one day after Minister of Citizenship Winston Felix told the Parliamentary Sectoral Committee on Foreign Relations that he has not received any instructions to execute a travel ban on those who have failed to repay loans taken for their university studies.
It would appear that some confusion was caused when sections of the media reported that there will be a “travel ban” on all those who owed. Both Felix and Minister of Foreign Affairs Carl Greenidge told the committee that they are unaware of this. Greenidge also accused the media of often using language loosely.
However, speaking on July 29th at the launching of a new building for the Student Loan Agency at UG, Finance Minister Winston Jordan’s intent was clear. He said then “While the Cabinet did not agree or had a proposal put about stamping passports, all information on recalcitrant borrowers will eventually be put at all immigration points and we will set up a desk at the same time for those who would be stopped from travelling to make the necessary arrangement for payment of the loan or debt prior to departure.”
Granger said too that he understood the Finance Minister’s frustration. “We need the money and it’s meant to be a revolving fund and if students one year or for several years at a time do not repay their loans, it deprives other students eventually from drawing from the shrinking pool,” he said.
He reiterated that there needs to be other measures, while adding that the authorities must move away from banning and use other more persuasive measures.
“Some persons seem to have set their minds against repayment and I would think that closer investigation might deem them unsuitable or too risky to give them loans in the first place,” he said, while noting that guarantors may have to be looked at.
Meanwhile, during a post-Cabinet press briefing, held yesterday morning, Minister of State Joseph Harmon said government has no intention of “blacklisting” the loan defaulters and preventing them from leaving the country, and he reiterated that Cabinet has made no final decisions to ensure repayment.
“It’s really a matter of trying to ensure that people honour their obligations. There is no intention at all in what has been proposed to affect the constitutional rights of any person to free travel in and out of Guyana. There is no sort of blacklisting,” Harmon told a post-Cabinet press briefing yesterday.
Harmon told reporters that the issue of UG defaulters was discussed at Cabinet two Tuesdays ago. He said that “it is really an attempt to ensure that people who have actually utilised monies that the state had provided, that they pay it back…The student loan is a revolving fund and if you take out of it and you don’t put back in it, you are preventing somebody who is entitled to the benefit of the fund from using it.”
He said that a sub-committee of Cabinet, chaired by Finance Minister Jordan, has looked at this issue to find solutions. “There is a large sum of money that is outstanding there that has really put the scheme into some serious problems. So, it’s really about giving the student loan programme back some buoyance so that we can continue to extend that loan to young people who are now coming into the system,” he said.
Harmon noted that there are several recommendations on the table, including publishing the names of defaulters and a public awareness programme in communities to urge persons to come in and work out a payment plan. “All of these, in my opinion, are soft sell methods that would try to encourage people to come and pay and honour their obligations,” he said.
An audit, conducted by accounting firm HLB, R Seebarran and Co, revealed that the delinquency rate in repayments was 70%, which amounted to billions of dollars for the period December, 2011 to May, 2015.
Jordan last week said that up to May, 2016, some 26,239 loans were granted to the tune of $9.5 billion, with repayment to date totaling $1.75 billion and installments due amounting to some $5.7 billion.
He announced a number of measures to ensure that those who have been granted loans repay them upon completion of their programmes, in keeping with the terms and conditions of their contracts. Among these are a “jubilee” offer which will see a 75% reduction in the accumulated arrears of interest if borrowers clear indebtedness no later than August 31, 2016 as well as a 50% reduction in the accumulated interest if borrowers bring their accounts up to date by September 30, 2016.
