STUDENTS’ LOAN BUREAU

Funding Tertiary Education – The SLB’s Role

Presented by : Analisa Allen

February 25, 2014

OVERVIEW- STUDENTS’ LOAN BUREAU

The Students’ Loan Bureau (SLB) is the only institution in Jamaica primarily geared towards the provision of tuition loans for tertiary education- est. in 1970 under the Students’ Loan Fund Act

The SLB operates a Revolving Loan Fund, which is used to fund tuition loans to eligible students.

Most loans are issued based on need, assessed through a Means Test.

Grants are also offered.

OVERVIEW- STUDENTS’ LOAN BUREAU

Mission Statement:“To provide affordable financial assistance

through a sustainable revolving loan fund to students in need who are desirous of pursuing

tertiary education, thereby contributing to social mobility and nation building.”

Tuition Loans only

STRUCTURE – STUDENT LOAN PRODUCTS

Loan Products offered by the SLB :

Targeted Loan ( General Loan for undergraduate study)

Parent Plus Loan (For undergraduate study )

Post Grad Loan ( For postgraduate study)

STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN Students between the ages of 16 - 50

Those who are eligible for tertiary education but unable to finance their higher education (full tuition)

Those who are able to only fund part of their tuition but still considered vulnerable

Jamaican citizens

Persons who have applied to or attending an Approved Tertiary Institution (ATI) in Jamaica or the region*

STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.

Interest Calculation: 9% add on per annumA method of calculating interest whereby the interest payable is determined at the beginning of a loan and added onto the principal. The sum of the interest and principal is the amount repayable upon maturity.

STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.

Repayment Period:

Repayment commences the January following the completion of the course of study*

Courses of study with the average tenure (3-4 years) : 15 year loan tenure (from commencement of programme until loan maturity) (increased in 2012 from 10 years)

Courses of study with longer tenure(5 years): 20 year loan tenure (from commencement of programme until loan maturity)

Payments in moratorium

STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.

Repayment Period: Loan payments become due on the first of each month Grace Period – to the 10th of the following month Late fee: $500 per late payment (currently)

STRUCTURE – STUDENT LOAN PRODUCTSTARGETED LOAN CONT.

Repayment Period- Assistance to those who are facing difficulties in repayment: Restructure of loansGraduated Payment plansDeferral of loan payments

STRUCTURE – STUDENT LOAN PRODUCTSPARENT PLUS & POST GRAD LOANS

Parent Plus Loan: Undergraduate StudyMaximum of $500,000.00 per loan Repaid monthly via salary deduction – maximum 36 monthsInterest rate 9% add on per annum

STRUCTURE – STUDENT LOAN PRODUCTSPARENT PLUS & POST GRAD LOANS

Post Grad Loan:Post Graduate StudyMaximum of $1,200,000.00 Repaid monthly via salary deduction – maximum 36 monthsInterest rate 9% add on per annum

SLB VS STUDENT LOANS IN OTHER TERRITORIES

Structure SLB Barbados Canada

Collateral N/A * *

Guarantors * * *

Repayment Period

15 years 20 years

Between 5- 12 years depending on the amount borrowed

Standard 10 years

Interest rate 9% 4% + 5%, or + 2.5% or Newfoundland and Labrador and Prince Edward Island are

the only provinces where there is no interest on the

provincial loan

Method of calculation Add on

basisVariable Interest

rate

Students have the choice of opting for a fixed interest rate of prime interest rate + 5%, or a floating interest rate of prime interest rate + 2.5%.

SLB VS STUDENT LOANS IN OTHER TERRITORIES

Structure SLB Barbados Canada

Monthly Payment -

Flat payment

Flat payment

Income Contingent

Bonding N/A * N/A

Grace Period Maximum of 6 months

Determined by a committee if loan was taken for full time study and 6 months if loan was taken for part-time study

Dependent on issuing body

GROWTH IN LOAN DEMAND

Loan demand has increased at an exponential rate – especially over the last 7 years .

This has resulted in significant increase in disbursements by SLB over the 7 year period.

Total applications received for 2012/13 total 16,676 or 23% over the previous year; for 2013/14 applications 15,300 or 8% less.

Despite this reduction, actual disbursements are projected to increase from $3.6mn in 2013 to $4bn in 2014.

DEMAND FOR STUDENTS’ LOANS: 2007 - 2014

Table 1

Loan Demand/Approved and $value Disbursed 2007/8 to 2013/14 

2013/142012/13 2011/1

22010/11

2009/10

2008/9

2007/8 Change2007 – 2014

$/# %

# Applications received

15,300 16,676 13,600 9,973 8,738 7,516 6,600 8,700 132%

# Applications disbursed/ projected

12,800 13,000 12,100 9,899 8,623 7,447 6,467 6,333 98%

Value of loans disbursed (projected) - $mn

$3900  

$3600 $2,750 $2,010 $1,598 $1,101

$840 $3,060 364%

Tuition Fees$000 305 277 227 203 185 148 130 175 135%

MAJOR FACTORS IMPACTING DEMAND

Growth in the number of students enrolled in Tertiary institutions

Increase in the number of applicants for students loans (30% of enrolled students currently funded by SLB).

Annual Increase in tuition fees charged by institutions.

MOVING FORWARD

Increased funding Reduction in delinquency level Change in legislation Public / Private Partnerships Individual Savings Credit Bureaus

CONCLUSION