New law proving effective in student loans recovery
The Higher Education Students' Loans and Grants Act, which was passed in 2015, gives the Higher Education Students' Loans and Grants Board legal force to recover all outstanding loans from former student beneficiaries in order to make the scheme viable, revolving and sustainable.
“We have put in place various strategies towards recovering the loans. As of July we had recovered MWK200 million (almost US$300,000). We are: engaging employers, engaging beneficiaries directly, [conducting] awareness campaigns, etc. We are yet to get anyone arrested. However, we are ready to take legal action on defaulters,” a spokesperson for the loans board wrote in response to questions sent by University World News.
“The recovered money is going towards supporting other needy students,” the spokesperson said.
The introduction of the act has seen more students who are in need of financial help at both public and private institutions receiving aid, while those assisted as far back as 1985 have been told to repay the money.
“All loans accessed during the academic years 1985 to 2012 or earlier are considered as matured loans and are due for payment. Therefore they shall be expected to be fully repaid within a period not exceeding 12 months,” according to a recent board statement.
Press reports indicate that the government is supposed to collect up to MWK1.7 billion in matured loans acquired by the former student beneficiaries from 1985 to 2012.
Failure by an employer to disclose the existence of former student loan beneficiaries among their employees carries a penalty fee of MWK1 million (more than US$1,000) per employee, under section 30 of the Higher Education Students' Loans and Grants Act.
Malawi’s loans and grants scheme started around 1985 with funds from the World Bank amounting to US$2.8 million.