Student loan scheme to offer more ‘favourable’ conditions

Zimbabwe’s financial institutions have started issuing loans in terms of a new student loan scheme supported by US$1 billion put together by the state and six local banks. The Higher and Tertiary Education Loan Support Facility is meant to assist current and prospective students who do not have the financial resources to support their college or university education and will be given on more ”favourable” conditions to students, according to the government.

Four banks – CBZ, ZB, NMB and POSB – and two micro-finance lending institutions – Eduloan and GetBucks – will meet half the budget, with the Reserve Bank of Zimbabwe covering the balance.

Students and parents are regarded as co-debtors under the scheme.

Last weekend, Higher and Tertiary Education, Science and Technology Minister Professor Amon Murwira told the state media that application forms for the loans are already at the tertiary learning institutions.

The minister said, however, a hurdle remains for some students to access the loans.

“We are rolling out the students’ loan scheme and the only sticking issue is to discuss terms that are favourable to our students because some of them may not be able to provide a guarantor and that’s what we are working on to make it easy for the learners,” he said.

In addition to the student loans, Murwira said his ministry had already met various local and foreign investors who were offering students’ accommodation on a build-operate-transfer model as part of the 100 days plan laid down by Zimbabwe’s new president Emmerson Mnangagwa, who took over from longtime ruler Robert Mugabe last November.

The loans do not cover foreign students attending Zimbabwean universities, Zimbabwean students undertaking certificate, diploma or degree programmes offered by foreign colleges or universities, or students who have received full government or other scholarships.

The government has said additional loans would only be considered after the lending institution has satisfied itself that previous loans by the borrower had been utilised for the intended purpose.

In an advertisement published this week in Zimbabwe’s newspapers, one of the financial institutions administering the scheme, POSB, urged students to start applying for loans.

“POSB is offering a university education loan support facility to cover your university tuition, boarding fees, food and other ancillary expenses,” reads the advert.

The financial institution said the loan has a five-year payback period and an interest rate of 7% per annum.

Students last week said their criticism of the loan facility, made when the facility was first announced last September, remains unchanged.

At that time, Secretary General of the Zimbabwe National Students Union, or ZINASU, Makomborero Haruzivishe, said the new scheme caters only for those whose parents or guardians are formally employed – in a country with at least a 90% unemployment rate. He said the model failed to address the high dropout and deferment rates and was oriented to profit-making.

“Despite the loans now coming, the scheme is, however, a half-baked cake. As ZINASU we have long advocated for academic loans and grants as a means to ensure quality education for all. However, the model of the loans that has been offered by the ministry neither addresses the problem of massive student dropouts and deferments due to failure to pay fees, nor is it accessible to the majority of suffering students as it is oriented at profit-making," he said.

"For example, if you get a US$500 loan from Eduloan, you will overall pay them back US$700, calculating interest.”

A statement from the Higher and Tertiary Education, Science and Technology Development Ministry said participating lending institutions which will administer the funds are required to pay the fees directly into the college or university account.

According to Pindula.com, an online information resource for ‘everything Zimbabwean’, student grants for fees and living expenses were discontinued around 2006 due to cash flow problems. The loans were replaced by a cadetship programme in 2010 that paid only tuition fees, which was also dogged by funding problems.

In March 2017, the ministry of higher education announced that the government owed tertiary institutions over US$27 million and the government was phasing out the cadetship scheme in favour of the current student loan scheme.