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The repayment of student loans

Jeffrey Lloyd, member of Parliament for South Beach and minister of education, threatened to garnish the salaries of public officers to repay defaulted education loans. Presumably he will pursue other delinquent borrowers through other legal means. He seeks to reduce the $83 million owed by delinquent borrowers.

In the minds of many Bahamians, the government has an obligation to pay for the education and training of all Bahamian students through tertiary level education. Supported by more than five decades of vacillating policies on the matter and the failure of previous governments to hold bonded scholarship and educational loan awardees responsible for their debt, this creates a stubborn obstacle to the minister’s plan. We wish him well but are not very hopeful.

Numerous Bahamians have failed to repay education loans or to honor commitments to give “bonded” service, for which salaries were paid. Monies and service owed to the government connected to education loans and bonded scholarships may well exceed the $83 million now owed.

We support the minister’s objective. Nonetheless, the government’s policy on tertiary education needs to be clearly enunciated.

Beginning in the 1960s, students awarded government bonded scholarships for tertiary level study overseas were required upon the completion of their studies to return to The Bahamas to work in the government service for the agreed “bonded” period.

In addition, the government maintained a special program with the University of the West Indies and paid full tuition for all Bahamian students.

As the years progressed, the government was confronted with an oversupply of graduates returning home and expecting to be engaged in the government service even when no vacancies for their skills existed.

Beginning in the mid-1990s, the government sought to induce students to undertake their undergraduate study locally by offering free tuition to the College of The Bahamas for all Bahamian graduates with five or more BGCSE passes at grade C and above.

In an effort to further reduce the number of awards tenable overseas, the government restricted the fields for which bonded scholarships or education loans might be had and or required students pursuing studies available at local tertiary institutions to pursue those studies locally.

The introduction of the Education Loan Program in 2001 was an effort to address this reality. Loans were to be available to qualifying applicants accepted into accredited programs of study both locally and abroad. Funds borrowed from local banking institutions were guaranteed by government and government would pay 50 percent of the interest on each of the loans.

The interest subsidy was discontinued in 2002. Some, who up to that time had been current with repayment schedules, fell into delinquency and remained so even after the reintroduction of the government’s subsidy after 2007.

More recently, the government has promised free tuition at the University of The Bahamas for all qualifying applicants. This will likely reinforce the belief of many that monies owed to the government for education need not be paid. And, this is the reality which the minister of education faces in his uphill battle to collect delinquent education loans.

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