Fears that students will drop out as state loan well runs dry

Some of the students who rely on government-funded educational loans in Malawi may be forced to drop out of school this year, according to Alexander Kude of the Commonwealth Students’ Association in Malawi.

Local media reported that Malawi’s Higher Education Students’ Loans and Grants Board (HESLGB) is facing a shortage of MWK4 billion (about US$2 million) to support students whose loan applications have been approved, Capital FM reported on its website.

Severe consequences

Speaking to University World News, Kude warned that the HESLGB’s shortfall in funding is going to result in negative consequences for students. “Students … may not [receive loans], or may receive their loans very late, resulting in some [students] dropping out of school or underperforming in classes” because they do not have the resources they need, he said.

The HESLGB recently increased the number of its beneficiaries. In 2024, the board approved a record number of 28,883 applications for the 2024-25 academic year, a 10% increase from the previous year. The approval rate for loans stood at 99.9% at the end of 2024, according to a Malawi 24 news report.

Prioritise loans

Kude said the government is not prioritising the issue of student loans. He said that, while the HESGLB’s MWK4 billion shortfall is supposed to be addressed in the government’s mid-year budget review, the government should have responded proactively because the issue is so “urgent”.

The mid-year budget review, however, has already been conducted and the HESLGB did not get any supplementary funding from the government, Capital FM reported on 30 January 2025.

Kude said the board had a budget of MWK29 billion for this year, yet the government approved only MWK24 billion. He said this shows the government does not prioritise student loans.

Stakeholders in the education sector are putting pressure on the government to do so, local media reported. Capital FM quoted Malawi University of Applied Sciences education analyst Victor Chikoti as having said: “I want to urge government to find a means to bail out these students who should not be denied their right to education.”

Diversify sources

Kude said the board should not solely rely on the government for funding. They could engage in various fundraising initiatives to generate money to support the students. “As an entity of higher reputation, investors would find it easier to support us [students] through them [the HESLGB],” adding that the board would fare better raising funds than the students would.

Chikoti reportedly said: “There are some institutions that have endowment trusts that have arrangements to support needy students. They probably need to activate their systems and ensure that not even one student drops out because of lack of support.”

Improve collection methods

Malawi’s Minister of Higher Education, Dr Jessie Kabwila, has reportedly told the HESLGB to come up with innovative ways to manage funds and effectively recover loans. In 2020, the board threatened to name graduates who were defaulting on loan payments, saying that it had been patient enough with defaulters and was ready to expose them, Malawi 24 reported at the time. It is unclear how much the HESLGB recovers each year and how much of this amount goes towards student loans.