ACHEA Conference July 2002

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Financing TertiaryEducationUnlocking the
potentialof Nations
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Traditionally financial assistance had been
centered around merit and need, awards were
generally

• For those who achieved excellence scholarships
  were made available
• For those who demonstrated financial need, there
  were loans and grants.
• There were instances where assistance was made
  available by request regardless of category
  (excellence or need).

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Problems Encountered

• If only those who achieved excellence were
  allowed to continue, the opportunities for social
  mobility created by education would be limited to
  only a few.
• The demands of any growing society cannot be met
  by only a few qualified persons. Growth and
  development depends on the availability of new
  skills in various sectors. It is unlikely that
  it could be met only by those who could afford
  their education and those who achieved excellence.

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Problems Encountered

• Nonetheless scholarships can provide the
  necessary incentives for studies in specific
  areas, and indeed opportunities have been
  provided time and again to bring technical and
  intellectual support to areas targeted for growth
  and development, for example CIT programmes
  undertaken by HEART NTA in Jamaica

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Demonstration ofFinancial Need

• The measurement of need is always a difficult one
  and can be highly subjective. In Jamaica the
  decision was taken to measure need by living
  conditions.

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Demonstration ofFinancial Need

• Through the survey of living conditions published
  by the Planning Institute of Jamaica annually,
  quintiles are established dividing the society
  into groups ranging from those at the poverty
  line and upwards. Assisted by this we were able
  to arrive at an acceptable measurement of need.

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The Jamaican Experience

• From the records available since 1972, it is
  clear that Jamaica has combined all three.
  Although it is apparent that at different times
  there was a strong leaning to one or the other
  direction.

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Jamaican Experience

• For Jamaica there was often no difference between
  those who achieved excellence and those who
  demonstrated financial need. The poor are often
  among the brightest and indeed there are degrees
  of financial need within this group.

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Scholarships

• Scholarships continue to be sourced by private
  sector bodies, the government, individuals, and
  educational institutions.

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Scholarships Contd

• The Government through the Ministry of Education
  awards scholarships annually based on excellence
  only to the top performers.
• Scholarships invariably cover tuition and books
  and (at least) assists with maintenance costs.

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Private Sector Scholarships

• Are available either to employees, children of
  employees, or persons pursuing programmes
  directly relevant to the entities core business.
  Again these are made available to top performers.
  The number of applicants for these invariably
  exceed the available awards.

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Private Sector Scholarships

• Increasingly therefore we observe awards that do
  not cover tuition as scholarships are perceived
  to do.
• There are now therefore a number of ways of
  assisting bright students. These are usually
  donated by private entities or individuals. They
  do not cover all their costs but they help.

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Educational Institutions

• TEIs often give awards based on achievement.
  Increasingly however, financial assistance is
  being made available by institutions for students
  who are in need. There is quite an extensive
  programme at U.W.I. Mona and to varying levels at
  other institutions through the island.

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Government

• Government assistant has never been limited to
  top achievers. In 1970 the S.L.B. was
  established. One must remember that although top
  achievers were likely to get scholarships there
  were many bright students for whom scholarships
  were not available as there were never enough.

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The initial objective1970-1993

• During these years funding was made available to
  assist persons in completing a tertiary education
  anywhere and was generally provided upon request.
  Loans were offered to persons studying anywhere
  in the world.

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The initial objective1970-1993

• The funds were provided by the Government of
  Jamaica and the World Bank.
• Repayment was pathetic, a large number of
  borrowers did not return to Jamaica, and many did
  not acknowledge the responsibility for their
  debt.

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March 1993 - 1996

• Between 1993 and 1996 a new scheme emerged which
  is still referred to as the GOJ/JBA scheme. This
  scheme was guaranteed by the government and
  funded by the banks.
• It allowed student borrowers to enter into loan
  agreements with the bank of their choice.

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History

• This scheme was marked by
• High Interest Rates
• Poor or no record keeping by the banks
• Limited Communication between the school, the
  student and the banks

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The Consequence

• Poor Repayment
• Abandonment of the scheme
• N.B. Student behaviour during this period drove
  the transition to a new and fairly tight scheme.

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New World Bank LoanJuly - 1996

• The New Mandate
• To ensure that no needy Jamaican student is
  denied a tertiary education by reason of
  finance.

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Challenges

• The measurement of need who is a needy Jamaican?
• New limitation only students attending Jamaican
  Institutions were able to borrow, the only
  exception being the foreign campuses of the
  University of the West Indies as well as some
  institutions in Cuba.

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Challenges contd

• Ensuring that funds were used to assist those who
  truly wanted an education hence no assistance
  to repeaters or for purchases of consumer items.

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Challenges contd

• Creating improved communication between the
  Tertiary Educational (TEIs) Institutions, the
  SLB and the Approved Financial Institutions
  (AFIs) where and when they were involved.

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Todays SLB

• OUR MISSION
• To provide efficient and friendly student
  financial services to ensure the sustainability
  of a student loan revolving fund, while
  maintaining acceptable charges for needed
  facilities.

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Todays SLB

• OUR VISION
• To be the financial institution of choice for
  tertiary students, offering efficient and
  friendly services at affordable rates.

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Todays SLB

• Undergraduates
• There is no distinction between the bright and
  the need.
• Assistance is provided for the needy who perform
  satisfactorily.

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There are two types of assistance

• The Grant-in-aid for the neediest of the
  needy. A non-repayable award.
• UWI foreign campuses - 40,000
• Jamaican Universities - 35,000
• UWI, Mona, UTECH, NCU
• All other institutions - 12,000

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Grant-in-aid

• There is no specific application for the
  Grant-in-aid, upon applying the means test to
  each application, those persons falling at a
  designated level are automatically awarded the
  Grant-in-aid.

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Tuition Loans

• These are awarded to applicants who
• Have been accepted to an approved institution,
  i.e. approved by the Ministry of Education for
  SLB funding
• Have been determined to be needy as a result of
  the means test.

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The Means Test

• Measures The family size vis-à-vis family
  income to arrive at the PCAR per family.
• N.B. The details for the actual test are
  submitted by applicants, we use the information
  applicants provide in the application forms.

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The Means Test

• Over the years we have observed several attempts
  to manipulate what is perceived as the formula.
  This is dangerous. Some applicants have actually
  worked their way out of a loan and grant by doing
  so.

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Additional Assistance

• The Boarding Grant This is funded by the
  Ministry of Education but administered by SLB.
• Criteria for approval The students must be
  accepted or enrolled at a foreign campus of UWI
  for a programme not offered at UWI Mona.
• Boarding grants are available for the prescribed
  period of study for the particular course.

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Alternatives to SLB

• Credit Unions
• Building Societies
• Commercial Banks
• N.B. Repayment with these institutions begin
  immediately after disbursement (while the
  applicant is studying)

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Alternatives to SLB contd

• Collateral is required
• Higher interest rates
• Loan Charges are higher
• No Moratorium on loans

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Benefits at SLB

• Moratorium for the course of study and six months
  thereafter.
• No Collateral required 2 guarantors to cosign.
• Lower Interest rates.

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Benefits at SLB

• Very competitive loan charges.
• Direct contact with the Tertiary Educational
  Institutions on behalf of the applicant.
• Highly competitive life insurance with added
  benefits for permanent incapacity, mental or
  physical.

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Benefits at SLB

• It is possible to qualify for a gift of a
  grant-in-aid.
• The life of the loan is ten years.
• Full financing is offered for all major Jamaican
  Universities.

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Benefits at SLB

• Customer friendly loan process.
• (still a work in progress)
• Tuition is sent directly to the tertiary
  institution.
• Variety of loan payment options.

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Benefits at SLB

• Loan Management System dedicated to Student Loan
  Management.
• Applicants are able to appeal if not approved.

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New products offered at SLB

• Post Graduate loans Funded by a commercial bank
  on the recommendation of SLB for each applicant.
• For those who apply and are not considered needy,
  a commercial bank loan to cover tuition costs.
• In both cases conditions apply. However the
  interest rates are the same as those at the SLB
  and the facility has been structured with the
  student borrower in mind.