Lawmaker wants Study Now, Pay Later program re-assessed

The House committee on higher and technical education (CHTE), with its chairman, Aurora Rep. Juan Edgardo “Sonny” Angara presiding, convened the stakeholders in the education sector Wednesday in an effort to re-assess and strengthen the Study-Now-Pay-Later Program (SNPLP) of Commission on Higher Education (Ched) for it to be more responsive to the needs of tertiary students.

The lawmaker recognized the significance and urgency of reviewing the SNPLP given the fact that 17 congressmen filed 12 bills on such.

A number of problems besetting the program were cited by the congressman during the committee’s TWG meeting. Angara pointed out the Philippines suffered from a depressingly low loan repayment, which was less than 2 to 3%. As of August 2010, it had increased to 5%, but still a far cry from our neighboring countries, Hong Kong’s 100%, Korea’s 81% and China’s 79%, as stated in a study made by Unesco in 2003.

Angara said “one of the reasons for this miserable turnout is the lack of sanction to the defaulters and their guarantors.”

He added of the five countries covered in the study, including the Philippines, all three countries imposed heavy penalties such as publication of names of defaulters and legal action. Thailand, though armed with a legal sanction, did not aggressively implement such to erring borrowers, thus registering a low loan repayment rate of 21%.

Another issue on the SNPLP is the difficulty encountered by Ched to track their borrowers after graduation, resulting in dismal turnout in loans payment.

The CHTE chairman pointed out “it should be best to invite private companies to join this undertaking and to ask government financial institutions (GFI) back to join the fold.”

He informed the group that in the early years of SNPLP, repayment rate was at an average of 41% and that is because of the involvement of GFI’s. When they initially pulled out in 1988, it dropped to 3% and further dropped to less than 1% when they completely got out of it.

He claimed that while this student loan program is a noble task, it is also too great a responsibility to put upon the shoulders of Ched alone, especially on the issue of tracing the student loanees.

Thus, different government agencies such as the National Bureau of Investigation and Bureau of Immigration were consulted for their comments. Both agencies readily gave their support to the proposed consolidated bill.

Also raised was the issue on high interest rate of 6%. It was suggested during the technical working group (TWG) that student loans be considered soft loans and be given a low rate of 1 to 2% instead.

Angara welcomed such recommendation, stating “this is a good move not only to increase payment collection but also to genuinely help our students, especially those who have limited resources to receive post-secondary education.”

Another important factor cited which contributed to the poor performance of SNPLP is the attitude of beneficiaries towards a student loan. Angara clarified that a student loan should not take the place or be construed as a scholarship.

The chairman underscored the need to distinguish students who come from poor families from those who are merely cash-strapped but have potential in areas which will benefit the country. “If a student is poor but deserving, then, by all means, let’s give him a scholarship. If it’s just a problem on cash flow, let’s give him a loan.”

The existence of an old law, RA 6014 creating the Students’ Loan Fund, enacted in August 1969 was brought up during this TWG. However, good and well-crafted it is, it remains to be properly implemented.

Before adjourning the meeting, Angara called on the body and stressed the urgency to finish and pass this priority bill on education.

He said “again, the mindset must be that we should invest in education and invest in our young people. We will surely reap the benefits later on.” –Charlie V. Manalo, Daily Tribune