Student loans halted as probe finds over 2,000 'ghosts'

Tanzania has suspended student loans amounting to TZS3.2 billion (US$1.5 million) affecting over 2,000 students, some of whom are believed to be non-existent as they failed to show up during a verification exercise.

Media reports said the two-month-long exercise carried out twice was to confirm that the students who were benefiting through the Tanzania’s Higher Education Students’ Loans Board, or HESLB, at various institutions of higher learning actually existed and were legitimate students.

Minister of Education, Science, Technology and Vocational Training Professor Joyce Ndalichako told reporters in Dar es Salaam recently that the students were “ghost” students since they were given enough time to prove they existed but did not show up.

About 40,000 students qualify each year for HESLB loans in about 50 institutions of higher learning.

Ndalichako said the students would have to reapply for the loans and the TZS3.2 billion supposed to be disbursed had to be returned to the ministry by the relevant institutions within one week.

Ndalichako ordered an audit earlier this year into the Tanzania student loans scheme after a public outcry that also prompted strikes by university students over delays in the disbursement of funds.

An audit by the government chief internal auditor conducted in 31 out of the 50 institutions of higher learning revealed shocking discrepancies in the HESLB system.

For example, there were cases of graduated students still benefiting from loans. In addition, a single bank account was found to be registered in two students’ names while some defaulters had in fact never even attended university. There was also a double allocation of loans to one beneficiary from both Tanzania’s HESLB and the Zanzibar Higher Education Students’ Loans Board.

The probe found that the entire system was affected by poor record-keeping. Loans board members were paid exorbitant allowances while collection agents were “dubious”.

One former beneficiary said: “My student loan was deducted from my salary until 2012. Although I had completed payment, in May 2016 the HESLB restarted fresh deductions as though I was a defaulter, even after presenting details to the bank.”

The audit also found that some students were registered twice in separate universities and while HESLB had a list, it did not tally with that of the banks.

Ndalichako reacted by sacking the head of the HESLB and some of the directors. An in-depth audit of financial institutions is ongoing to tally their records with those of the HESLB.

Experts have advised that the scheme should adopt an online system of registration, verification and filing of complaints, in addition to the scrapping of collection agents.