Role of banks in funding student loans

By Jacob Mosenda

Dar es Salaam. Students who lack the financial means to continue their studies in universities or vocational and technical colleges can fulfill their dreams with financial support from national financial institutions, it has been said.

The opportunity arises if local banks decide to join the government’s efforts to provide low-interest loans to students in need.

Recently, the government unveiled a plan to extend the disbursement of higher education loans to technical college students.

This decision is considered crucial for the growth of the sector and the reduction of youth unemployment in the country.

The Ministry of Education, Science and Technology said loan disbursement has been extended to technical education students starting with degree programs that ensure much-needed skills in the labor market. employment, possibly from the academic year 2023/24.

The agreement is that at that time, funds should be available for technical education students, including other sources, to enable many students in middle-level institutions to benefit.

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Interesting as it may sound, the recent development addresses a major concern among economists about HESLB’s ability to continue funding students at the same capacity when significant charges such as value retention fees and a penalty of 10% for defaulters has been removed.

However, in the HESLB Sustainability Special Report published by The Citizen last week, the Government was adamant that the Higher Education Student Fund will be sustainable given the strategies outlined to improve the performance of the program.

Since then, the government has increasingly encouraged stakeholders, including commercial banks, to increase the level of funding for young Tanzanians to enable them to benefit from the education of the country while ensuring the sustainability of education. .

But, experts believe that local banks can flex their muscles for technical college students, while at the same time, sustainability of HESLB funding can be achieved through scholarships and low-interest loans to students, parents or guardians.

Among local commercial banks, NMB Bank Plc has already led the way by allocating Sh200 billion in a 9% interest loan (cheap loan) to students in the 2022/23 academic year.

Following this decision, the Ministry of Education, Science and Technology encouraged beneficiaries, parents and guardians to take advantage of this opportunity.

“You can borrow to educate yourself and your son or the child you are raising in higher education, including technical colleges in this country,” says role minister Prof Adolf Mkenda.

“I would like to call on other banks to support President Samia Suluhu Hassan who has increased allocation of funds for higher education student loans,” he added, while congratulating NMB Bank Plc.

According to him, their support should be given given that the Head of State has abolished the fees linked to the loans which constituted an obstacle for many students to benefit from them.

According to him, the bank has also allocated funds to provide scholarships for 100 students with special needs, noting that each student will receive a laptop.

Apart from NMB Bank Plc, Vodacom has also provided scholarships as well as opportunities to 50 top performers in science subjects from the University of Dar es Salaam (UDSM).

The number of students joining universities in the country has increased from 44,715 in 2012/13 to 100,620 students in 2021/22, which is equivalent to 125%.

The growth of the higher education sub-sector is due to the significant investments that have been made by the public and private sectors in various areas of teaching, learning and infrastructure.

“In terms of higher education funding, we have seen the government increase the scope of loans in a bid to enable more students to meet the costs of learning in higher education” said Prime Minister Kassim Majaliwa.

Majaliwa made the remarks at the opening of the 17th Higher Education, Science and Technology Expo, noting that a total of 5.32 trillion shillings has been disbursed in terms of loans from the academic year 2005/06 to 2021/22. He said President Hassan’s goal was to continue to increase the number of students with access to higher education loans to 488,000 by 2025/26.

To achieve this, he noted that the government has continued to seek different sources of funding by involving development actors and financial institutions.

“We call on other institutions to support this initiative and inject more funds into the sector to enable many Tanzanians to have the opportunity to join universities and technical colleges,” he said.

What the experts think

In Tanzania, higher education has become very expensive at a time when the lives of many households continue to deteriorate due to different factors.

Many educational institutions follow varying fee structures. Therefore, without building strong and sustainable capacities that will complement government efforts, many students will miss out on opportunities to pursue higher education.

“Suppose all the banks in the country decide to allocate 200 billion shillings like NMB Bank Plc and give scholarships to the top performing students who take courses of great importance to the nation such as science and technology “, says Dr Judith Mmari, consultant in economics and development, by telephone. , wondering where the country would be in the next ten years.

According to the expert, what is needed is genuine cooperation between the government and financial institutions with the aim of creating a win-win situation.

“HESLB cannot be overwhelmed if there are cheap loans from banks. This will help ensure that the number of students from wealthy families applying for loans from the institution decreases,” he said.

Professor Abdul Mohamed of the State University of Zanzibar (Suza) suggests that sufficient education should be given to Tanzanians to enable them to understand that the less they can get the loan and support for their children, the better the children of the poor families can be served.

“The government is aware that the private sector can play a big role in the development of education in the country. That’s why it started with the banks,” he said.

He stressed that Tanzanians should be made aware that this is an opportunity that should be fully utilized for the benefit of their children.


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