UPND leader Hakainde Hichilema says the interest rates on student loans being applied by the Higher Education Loans and Scholarship Board (HELSB) to beneficiaries is too high.
But HELSB corporate communications officer Kawanda Chiselwa says the current interest rates are only pegged at 15 per cent.
Hichilema argued in a statement that graduates’ current earnings were not commensurate with the harsh economic realities caused by the PF government’s incompetent leadership.
“We wish to express serious concerns on the high loan interest rates being applied by the HELSB to the student loan scheme beneficiaries. While we appreciate the contractual obligations between HELSB and the beneficiaries, and the reason that the money recovered is deployed into the revolving fund for the benefit of new students, we, however, are of the view that the instalment and interest rates are way too high under the prevailing economic climate in Zambia. Most of our graduates entering the competitive job market are underemployed. Their current earnings are not commensurate with the harsh economic realities caused by the incompetent leadership of the PF. It’s remarkable to note that the PF are hell-bent on recovery of loans from work debutants with small incomes, but are dragging their feet to recover money from Ministers, who illegally stayed in office in 2016,” stated Hichilema.
“The HELSB should, therefore, consider reducing the high interest rates on these loans to enable their clients to afford the instalments. We are beneficiaries of free education from primary school right up to university, and our desire as UPND in government, will be to offer free scholarships to deserving students regardless of their background. We have seen it happen in other African nations that have prudent and strong fiscal priorities and under our leadership it shall happen here again.”
But in an interview, Chiselwa said the interest rate pegged at 15 per cent was fair and could not be reduced because owing students had a long repayment period.
“We sponsor students to go and study at one of the seven universities: Copperbelt University, (CBU) University of Zambia (UNZA); Chalimbana; Mukuba; Kwame Nkrumah; Kapasa Makasa and Mulungushi University. For the other five universities, we only started in 2018, so we haven’t had anyone graduate yet from these five institutions. But from UNZA and CBU, we have been sponsoring them, those we sponsored from 2004 what they got was a loan and they signed a clause, which says they need to pay back to help sustain the loan. The 93 per cent you are talking about is a lie, we charge 15 per cent on reducing balance. I will give you an example: if someone is owing K30,000, the payment period is 10 years, so for you to repay that money in 10 years, your interest will be K29,000. But another person owing K30,000 if they say they want to pay off, the only thing that we are going to get is probably a K500. Now, K30,000 five years ago and now the value is not the same,” said Kawanda.
“So, the longer they take to pay, the more they get to pay back. But it is not 93 per cent, no. We are charging 15 per cent on reducing balance. The other thing in the Act stipulates that as a beneficiary, you are supposed to come to us, but these beneficiaries have been waiting for us to follow them. So, again, we are incurring costs that the beneficiary has to incur. Remember, we have thousands of students that want our support, we need to sponsor them, too. It’s an obligation they just have to pay back. The interest is not high, it is 15 per cent and it won’t be reduced. No bank in this country will give you a loan for you to pay back in 10 years.”