This week in beating down the poor some more, the Students’ Loan Bureau (SLB) has announced an increase in fines for persons who fail to make payments on time and in full. These persons will be faced with a new penalty of $750. The fine will also apply where persons pay less than the stipulated amount and to accounts in arrears, per month.
Sounds like a brilliant idea until we stop to think about it and the ensuing implications. This increased penalty would make sense if so many graduates indebted to the SLB could find jobs and if many of those who are fortunate enough to find a job were making more than what it takes to just get by. Until then, we are beating a dead horse.
Are there delinquent persons who can pay but refuse to? Absolutely. I am in full support of the SLB taking any and all necessary measures to recover funds in these cases. We must honour our responsibility to the bureau, there are no two ways about that.
The SLB operates a revolving fund and obviously for it to be sustained past beneficiaries must repay their loans so others can benefit from those opportunities as well. Beneficiaries are however, not operating outside of the economic constraints facing the country.
Let’s take stock of the economic realities facing graduates. Unemployment and underemployment are among the biggest issues facing our population right now and young people trying to enter the economy are facing the brunt of it. The World Bank indicates that “The unemployment rate in Jamaica is about 13.4% (end 2013/14), with youth unemployment more than twice the national rate.” In fact, the Labour Market Transition of Women and Men in Jamaica survey, conducted in 2013 by the Statistical Institute of Jamaica (STATIN) in collaboration with the International Labour Organization (ILO), revealed that the youth unemployment rate is a whopping 44.9%.
Many students take that walk on graduation day very proud of their accomplishments but equally filled with anxiety about the uncertainness of their future. They put so many resources – human and capital – and make so many sacrifices into getting a university education because this is presumably the way to upward mobility. Only to be sitting at home, sometimes for years, without the prospect of a job to offset their student loan debts and to live a relatively comfortable life.
The SLB grants its beneficiaries a 6-month grace period to start repaying their loans. Whether or not they have secured a job to be able to make those payments is not factored in so interest starts to accrue, late fines are applied, and before you know it you are in a shitload of debt and fighting the sea of hopelessness that will inevitably come.
Many graduates sit idly at home for months and years out of work, not because they are lazy but because the prospects of getting a job, especially without well-to-do parents and/or ‘links’, are depressingly low. For that reason many high school students and graduates are becoming more and more incensed with this idea sold to them that getting a higher education will mean a better quality of life. It is really more of a gamble; a gamble that may result in increasing poverty.
One of the solutions to the unemployment predicament faced by graduates that is always proffered is for them to create their own employment. This too sounds like a lovely idea until we consider the fact that entrepreneurship is not the panacea we make it out to be. What with all the difficulties with government bureaucracy and getting start up loans from the bank, it is a mystery to me why we are still frantically peddling this “start your own business” idea to young people with nary a thought as to the structural hindrances that will impact the viability of it for most.
The increase in SLB fines announced will not substantially solve the quandary we are in but will most certainly make it more difficult for already financially strapped beneficiaries to pay off their loans. Additionally, I believe the SLB and the government can do more under the current economic conditions to (a) not put more beneficiaries who are currently unable to pay under pressure and (b) put better measures in place to collect from those who are able to pay.
Why aren’t renegotiation and extension options, including income-sensitive repayment plans and hardship deferments, embarked on as part of policy initiatives? We are operating in a very short-sighted manner by not taking all the relevant factors into consideration in order to make sound decisions that will result in desired outcomes.
On the matter of putting better measures in place to collect from those who are able to pay, the government and the SLB are simply not doing enough. A friend relayed an experience to me that underscores the need for the SLB to find more creative ways of collecting from those who are able to pay.
Being a graduate student abroad with a steady income and not many responsibilities, my friend was at the time able to pay the SLB a sizable amount of money each month. Upon enquiring with the SLB about what measures they have in place for him to make direct payments, he was told that they do not have any such facility and that he would have to send the funds to someone in Jamaica for them to make the payment on his behalf.
I myself ran into problems recently when I assumed that I could make my SLB payment via NCB online to the SLB account number advertised on their website. The payment I made was not reflected on my account and upon enquiry I was told I have to physically go to an NCB branch (yes, stand in a bank line in 2015) to make the payment. At the very least the SLB should be making it easy for those who can pay to pay.
In this time of economic hardships and desperation it is imperative for us not to beat the proverbial dead horse but to instead find innovative ways to solve the problems we are facing. The youth, and unemployed and underemployed graduates in particular, simply cannot absorb any more economic shocks. The SLB might therefore be inadvertently making it less likely that loans are repaid by its beneficiaries, as their loans balloon out of control in light of the economically austere environment we are all forced to navigate.