Full Length Research Paper
ABSTRACT
This mixed research study focused on the selection criterion and guidelines used by the Higher Education Students Financing Board (HESFB) in granting students loan scheme to University Students in Uganda with a sample from Makerere University. Findings revealed that the majority of the loan beneficiaries are aware of these guidelines and one to benefit from the scheme had to formally pass A level education stage with 3 principle passes in a science subjects combination and are selected after filling a standard application form. Although many come from low economic family status with heavy household poverty, the study concluded that the selection criteria favors students who have passed science subjects and thus leaving behind impoverished students from humanity study disciplines/courses. Thus it recommends a framework for the need to revise the guidelines to cater and consider all backgrounds of applicants for this loan scheme irrespective of their course, family background and economic status to achieve the program goal as it's done in other countries.
Key words: Loan scheme guidelines, Higher Education Students Education Financing Board (HESFEB policy program, financing higher education.
INTRODUCTION
The genesis of the Higher Education Students Financing Board (HESFB) dates way back to the enactment of the Higher Education Financing (HEF) Act in 2014 as well as setting up the Student Loan Scheme Financing Board, to establish a systematic and well-organized model in managing the student’s loan scheme. The Act gives the Loan scheme Financing Board special powers and legal authority, especially when it comes to disbursement, general management and the entire students' loan recovery. The board is mandated to receive funds from the government of Uganda after taking precautionary measures on qualifying Ugandan students who are undertaking science courses at the undergraduate level both in tertiary and universities level in Uganda. The schemes are purely for Ugandan undergraduate students seeking to acquire higher education from accredited public and private institutions of learning fully licensed and chartered by the National Council for Higher Education (NCHE) based on Section 20(1) of the HEF Act (Criteria, 2014) (Highlights, 2014). According to the policy of the schemes, the study aims to majorly attend to four (4) objectives namely;
Kyaligonza et al. (2015)show that initially, to qualify for the loan, a student is supposed to have studied sciences at the Advanced level and attained two or more principal passes. Also, students’ financial background is highly considered; the ministry should track the status of the application right from primary school to establish if the applicant is poor. Meanwhile, MoES (2016)indicated that the scheme shall be open to all Uganda citizens who need financial assistance in recognized institutions of higher learning within and outside Uganda.
Government funding for higher and tertiary education has been declining over the years largely due to the financial constraints brought about by the unprecedented growth at the lower levels of education (Universal Primary Education and Universal Secondary Education Schemes). In 2014, a total of 45,000 students were admitted to both public and private universities. Out of these 45,000 students, 4,000 were given Government Scholarships. The Government, through the students’ loan scheme, offered loans to only 1,200 students. This implies that the remaining 39,800 students, who were no given, have to fund their university education by themselves. This occurrence is not new but there have been cases even during the 2012/2013 academic year where out of 47,000 students who were admitted into universities, only 9% of 4,000 were sponsored by the government, implying that 91% had to go for self-sponsorship. The problem is exacerbated by the fact that the 4,000 scholarships mainly favour the children of the rich who have had an opportunity to study from first-class schools where they can obtain good grades.
It is against this state of affairs that the government introduced the student’s loan scheme though its coverage is still quite low. This has been observed from the first phase of 2014, where only 1,200 students were granted loans across all eligible universities in uganda. This has raised concern whether the scheme's objective of increasing access to higher education will ever be achieved when the numbers of students getting loans are still minimal as well as sustaining it. This calls for other interventions of financing to fund the loan scheme to increase access to higher education.
Uganda, since its independence in 1962, has only opted for one public financing scheme. That is, the government merits entry scheme through the Public University Joint Admissions Board (PUJAB) and Joint Admissions Board (JAB) which have not equitably solved the problem of higher education access in the country. In countries like China, UK, USA, Colombia, Korea, Tanzania and many others, students’ loan has increased access to higher education as it provides finances of up to 80% of the student’s financial needs at school (Hong and Li, 2003) and (Shen and Ziderman, 2009). In Uganda, things are contrary: although the loan scheme has been reported to be successful in the disbursement and repayment of student loans scheme (Omona, 2012), it does not cater for all students’ finance at the university. Therefore, the study sought to explore how the students’ loan scheme in Uganda are being managed with focus on the criterion and guidelines employed in the loan granting process.
Purpose of the study
This study aims to examine the selection criterion and guidelines used by the Higher Education Students Financing Board of Uganda in assisting university learners with students loan refunded scholarships focusing on Makerere University, which is the largest primier public university in Uganda.
Theory of the study
The study was guided by the equity theory of resource distribution. This theory is derived from the Aristotelian equality principle (the same for all) and fairness principle (different but appropriate). According to this theory, equity refers to an educational and learning environment in which individuals can consider options and make choices throughout their lives on their abilities and talents, not based on stereotypes biased expectations or discrimination. Thus, the equity theory in this perspective is applied in the sense that higher education student loans should be managed fairly and equitably without bias related to age, origin of learners, religious and political inclinations. Once this is followed it implies that the selection of the beneficiaries will be equitably done allowing a multitude of Ugandans to benefit from the scheme.
STUDY METHODOLOGY
This study employed a mixed research design both qualitative, quantitative and sampled students loan scheme beneficiaries in Uganda focusing on Makerere University. The study used a semi-structured questionnaire and interview guides to collect data from students loan beneficiaries and stakeholders in Uganda such as Ministry of Education and Loan Scheme office Headquarters in Kampala. Data from loan students at Makerere were analyzed descriptively using frequencies and percentages while the interviews were coded and analyzed thematically.
FINDINGS
Factors influencing students in applying for students loan funds
In this segment, student beneficiaries were requested to rate themselves on the criterion followed when granted students loans in Uganda. Several questions were asked on these criteria followed. The students were asked is to name the factors that influenced them in applying for student loans. Here, several factors were identified by the respondents in Table 1.
The findings above show that most of the students 205 (53.1%) said poverty and low family economic status were the major factor that made them apply for student loans. This is followed by 72 (18.7%) who indicated inadequate and low social-economic status highly influence students’ application for student loans so that they can access higher education as their counterparts from privileged families. Other factors included a high number of school-going children in the household and being orphans with each contributing 13 (3.4%). Thus the demographic factors and life expectations of parents also highly determine one’s application for student loans. The least representation was on disability and inspiration from friends with each contributing 1(0.3%). Therefore, a combination of factors but with major emphasis on family low economic status is responsible for students’ application for loans in Uganda’s higher education system. Also the beneficiaries were engaged on whether they know the guidelines for students’ eligibility. Most of them indicated that they knew the guidelines as indicated in Figure 1.
Results revealed that majority of the study respondents (65.30%) agreed that they know the guidelines for students’ eligibility. This implies that they can use this opportunity to meet these requirements and access the student loans from the government. Also the loan Scheme Beneficiaries were requested to identify guidelines they know for their loan eligibility. Findings on this are presented in Table 2.
On eligibility, it is clearly indicated that majority of the study respondents 94(22.9%) indicated that one must have passed A’ level with three principles pass/ min – 15 aggregates. This was followed by 90(22%) for one being a Ugandan with a national identity card. This meant that one must be a Ugandan with a sounding academic track record (Competence). These results were followed by 84(20.5%) for those students from an economically disadvantaged background and 61(14.9%) eligible students who have been admitted to a higher institution recognized by HESFB, 48(11.7%) of students having done sciences at A’ level.
Other factors include students having joined institution of higher learning 8(2%), having been admitted on science course 8(2%), being a fresh student from A’ level (first year) direct entrant 5(1.2%). These results in general show that apart from economic disadvantages, the nature of the course one offers with emphasis on science is paramount to student loans, disability and direct year of entrants from A’ level. This also shows that some students offering arts courses with economic disadvantages may be left out. Also, the requirement that one must have entered a higher education institution is not feasible as it might not be easy to enter without funds.
This shows that for students to fully benefit they ought to have other sources of funds. Students beneficiaries were asked: ‘Are these guidelines published?’ and the majority of the study respondents (88.62%) agreed that these guidelines were published compared to 13.36% who indicated that they were not published. These results show that the guidelines are published and can be accessed by students (would be beneficiaries) to determine whether to apply or not. This in one way or the other enhances possibilities to access higher education.
Also, students were asked to indicate where these guidelines are published. The publication means are offered in Graph 1.
According to the results above, the majority of the study respondents 171(38.6%) indicated that the guidelines for student loans were published in newspapers, followed by 81(18.3%) who said they were published on the HESFB website 38(8.6%), radio. Other areas where the guidelines are published include internet 29(6.5%), application form/ agreement 26(5.9%), higher HESFB fliers 31(7%), television 23(5.2%). These findings show that since the guidelines are published more in newspapers, many students in remote areas may not have access to these papers limiting possibilities known about the policy, thus limiting their access to higher education. Also, students in peripheral areas from Kampala may not have access to the HESFB website and other platforms like the internet, HESFB fliers, televisions and application agreement. All these are a big turn for the loan policy to materialize positive outcomes. Graph 2 shows how students were selected.
Findings showed that many of the students who benefited from the student loan scheme were selected after completing application form 108(33.1%), followed by 54(16.6%) who showed good performance at UACE/ merit. These were followed by 22(9.8%) who were selected randomly, followed by 11(4.9%) who showed least representation 2(0.6%) were selected through appeals. These findings revealed that since many followed application forms, it means that there are formal guidelines that students follow to access the student loan scheme.
Graph 3 indicates most of the respondents got to know that they succeeded through SMS text message 137(36.9%), followed by those who were informed through newspapers 131(35.3%). Some others were informed through the HESFB website 41(11.1%), phone call 19(5.1%), social media 9(2.4%). This finding shows that several means are employed to inform students who have succeeded in the student loan scheme. Still, on the guidelines, students were requested to give gaps in student loan. Findings on the gaps in the guidelines of student loan policy guidelines were identified and presented in Graph 4.
Graph 4 results indicate that majority of the study respondents indicated the major loophole is limited publicity of the scheme 45(16.2%), failure to cater for other educational needs/costs that is, feeding, hostel 35(12.2%), 22(7.9%) not supporting art courses 20(7.2%); loan guidelines/adverts were shared over the internet yet the neediest students do not have access to internet. Other loopholes included delay in making payments 18(6.5%), corruption among loan scheme officials 16(5.8%). This is manifested where students from well to do families bribe the loan scheme officials to include their children in the scheme leaving out the disadvantaged group.
Also, respondents showed gaps of unfair loan payment times/ no grace period 14(5.1%), a limited number of beneficiaries 12(4.3%), among others. These results show that the student loan scheme has so many gaps including delays in giving money, supporting only one side of education which translates into providing segregate higher education, not taking into account regional imbalances with emphasis on the central region where access to information is readily available.
Participants were also asked about the challenges faced in student loan scheme management. On this question, respondents revealed admission challenges. A participant from HESFB showed that;
Several challenges is ranging from structural to financial. There is lack of a centralized system and fees structure to cater across all universities and distinguished courses. The admission requirements are different across universities, admission criteria for medicine are different.
Likewise, a participant from HESFB showed that;
We have not supported the number of students/ applicants we intended to give loans to. For instance, we would now move from 1000 – 3000 additional support every year but we have not achieved this due to funding dilemmas.
Such responses suggest that there is a serious management challenge resulting in different admission procedures under one funding board. The qualitative funding also reveals that funding dilemmas also limit the achievement of loan policy targets.
Finally, respondents were requested to suggest ways through which gaps identified can be rectified. The different ways suggested are offered in Graph 5.
The above results indicate that the majority of the study respondents 51(19%) indicated that there should be an improvement on publicity advertisement/ sensitization about students’ Loan Scheme, followed by 31(11.5%) that indicated incorporation of provision for other necessities like food and accommodation. Findings also revealed that there should be an extension of the scheme to also cover students from Arts subjects 25(9.3%), sucking corrupt officials 13(4.8%), securing jobs for beneficiaries to allow them to pay on time. Also, respondents showed that the loan scheme must be decentralized to all districts to ensure equity in distribution.
Study participants from an interview were asked, how can the government improve loan recovery to benefit a wide student community? A study participant (Director) from MOES showed that;
Firsts of all, the scheme has embarked on recovery for the last 2 years and the loan board has recovered over a billion Uganda shillings within one year. But also I want to emphasize that the loan board has very clear criteria of recovery and it's after one year after school that they begin with the recovery as soon as gets the income to pay back. At least with the current criteria, we have not reached the stage where there are cases of those who have paid.
This shows that widening the grace period before making repayments highly motivates students to repay their loan. It also gives them enough time to prepare for their jobs and mobilise funds for repayment purposes.
DISCUSSION
Based on the above results, the purpose of the study is to assess the selection criterion and guidelines used in granting students loans in Uganda. It is revealed that the household poverty/low-income status of a family, the nature of the course one offers (science prioritized), the inadequacy of funds, demographic trends with several children competing for education in a family dictate ones’ possibility to apply. Student believe that, there is a possibility to access student loan if you are an orphan.
Such justification resonates with those of Kyaligonza et al. (2015), who found that Engineering courses received the highest number of beneficiaries placed at 349 students. They are followed by Science Education (291), Human Medicine (210), and Agriculture (98), among others. Petroleum and Geoscience engineering received the least number of students at 27. Among these, 18 are males, while 9 are females. Kampala International University had the highest number of students (372), Makerere University had 220, Kyambogo University had 150, Ndejje University had 137 while Busitema University had 99. Out of the 1,683 applicants for the loans, 1,325 (78.7%) were approved, of which 298 (22.5%) were females, Mbarara University of Science and Technology (77), Gulu (42), Uganda Christian University (39), Uganda Matyrs University (32), Nkumba (14), Islamic University in Uganda (11) and Bugema University (8). These findings show that almost all beneficiaries were from science-related disciplines.
Relatedly, the discourse remains uncertain but as far as the objectivity of the loan scheme programs is concerned, countries like China (Lu and Chen, 2014) stated that the numbers of students opting for loan schemes is tremendously declining compared to many African countries such as Tanzania, Ghana, and more so Uganda who are just appreciating the program. The dilemma and scholarly drive remain how will the objectives of this program to be realized and sustained to enhance higher education access in Uganda and how best could this be attained. Thus, If African governments work harder to attain a meaningful loan policy program as well as a recovery mechanism, they will be in a position to enforce the loan scheme management bodies and task them to realize the required objectivity of the program. In Uganda, the Higher Education Student Financing Board (HESFB) has to offer clear criterion and well-designed guidelines to be followed before granting a loan to students in higher education. This will help the government to reduce wastage of public funds. The money offered to students in form of loans should be spelt out to them that they are given the loan because they do not have, but after school, they have to pay when they get employed. In conclusion, the financial challenges among students, nature of the courses offered are highly based on when deciding possibilities for one to access student loans in higher education institutions in Uganda. Findings revealed that for one to qualify for a Students loan scheme in Uganda must be fully admitted to a tertiary institution of learning.
Comparatively it was revealed that students accessing student’s loans scheme in Uganda may apply through Centenary Bank. This is almost similar with some countries like China where one must be a customer with an account with this bank under the commercial bank loan from an agency in HEI’s region (Shen, 2010). The loan is centrally controlled by HEIs but is borne by the central government. For rural credit cooperative loans from an agency in the household region, the interest is borne by provisional governments. For the China Development Bank, the loan from the agency in the HEI region interest is generally borne by the corresponding local government (Jianguo and Rong, 2011).
Students loan applicants must have studied A level and must have two principal passes. This finding is in agreement with Kyaligonza et al. (2015), who showed that initially, to qualify for the loan, students are supposed to have studied sciences at the Advanced level and attain two or more principal passes. Also, this student was supposed to be poor and that the ministry would track the status of the applications right from primary school to establish if the person has a life of financial hardship.
An eligibility criterion for all the loan provision is open to all citizens of Uganda. This finding is in tandem with MoES (2016)which indicated that the scheme shall be opened to all Uganda citizens who need financial assistance in recognized institutions of higher learning within and outside Uganda. Further, MoES (2016) andMOES-Uganda (2008), in agreement with the study findings, reveal that for you to be selected for the loan scheme, you must be a citizen of Uganda and also must be qualified for admission into any institute of higher learning recognized by National Council for higher Education. This shows that it was left open to all would-be beneficiaries and in institutions recognized by the national council for higher education.
The loan scheme was designed for students from economically impoverished families who cannot afford to pay for their tuition. This finding concurred with Wanyama et al. (2016), who indicated that access to higher education for children from poor homes, a loan scheme is one of the panaceas to the problems of rising fees in higher education.
Emphasis is that students’ loans should be given to eligible students to pursue higher education in higher learning institutions while targeting poor and needy students.
CONCLUSIONS
From the study findings, the student loan scheme in Uganda prioritizes funding of science-related courses.
Hence it implies that there is negligence or relaxation on humanities. This may create future problems as many students will be forced to do science creating human resource gaps in humanities. The amount of money given to the eligible students of student loan funds are small and caters for tuition alone. Thus, they have inadequacies when it gets to meeting operational costs like accommodation, meals, stationery, among others. In Uganda, there is also a great repayment challenge as the policy does not clearly define how repayment can be done once the students complete their studies. It implies further that the risk of non-repayment is high interfering with future beneficiaries’ opportunities. In Uganda, the key guarantor to students benefiting from loan scheme is the government while in sister neighbouring countries a student has to present guarantors to access a loan.
Further, in Uganda, there is a historical mindset problem that all government loans are always non-refundable loans. Thus, this creates a high risk of non-repayment and many could be tempted to default, which creates a huge recovery burden of the student loan funds. Hence, it is recommended to have pre-loan award and exit interviews with the applicants/ beneficiaries. Another dilemma with student loan scheme funds in Uganda is that the money which is offered to students is derived from the consolidated fund.
Wretchedly, the administration of the student loan scheme is entirely in the city centre (Kampala City). Uganda as a country is big which limits students from peripheral/ far to reach districts such as Kabale, and Kisoro in Western Uganda, Arua, Koboko and Nebbi in West Nile, Kyenjojo Bundibugyo and Kasese in Midwest Uganda, Moroto and Napak in Karamoja among others to benefit from the student loan scheme.
Recommendations
There ought to revisit the selection criterion of the beneficiaries from the student loan scheme. This selection may be objectively done with ones’ credentials, economic background as stated in the policy. Issues of favouritism, corruption may be fought with severe punishments offered to culprits. Also, colleges and universities should provide recovery guarantees in state loans. In the administration of state student loan repayment, colleges and universities should be able to reduce the uncertain risk of state student loan, the guarantor should be changed to the guarantor who provides the loan student's destination, and be responsible for guaranteeing the accuracy of the loan student's contact information.
Likewise, it is recommended that there should be an increase in the punishment of students for breach of contract. In addition to the moral level, the borrower's willingness to repay is mainly dominated by the cost of default. Through the establishment of a personal credit information management system for college students, the credit status of college students is supervised, so that employers can understand the credit status of college students through certain channels, and through the effective use of credit resources, to standardize students' credit behaviour.
Students’ enrolment decision making has been also affected by political factors, economic factors, cultural factors, family influence and school impact which are not part of this study. Therefore, these factors need to be considered for successful students’ loans financing for example economic downturn and increased unemployment have led to an increase in students’ enrolment. In Uganda, the plan to establish a higher education student loan scheme dates back to the early 1990s. In the government white paper of 1992, it was recommended that a system of study loans be established to extend educational loans to students who were unable to raise the necessary finances for their university education (Uganda Government, 1992). Such loans would be interest-free and payable when a student completes his/her studies and finds gainful employment. A student loan program should be designed to collect (according to the present value of the reasonably-expected repayments discounted at the government’s borrowing rate) something reasonably close to the amounts lent fewer losses from defaults and other purposefully designed subsidies or repayment forgiveness features.
A loan program needs to have a collection agency that is viewed as professional, incorruptible and technically expert. Universities and other eligible tertiary level institutions must be enlisted as partners in the program, especially in impressing upon the student recipients that loans are legally enforceable obligations that must not be taken lightly or used in excess, and in keeping track of the borrower’s whereabouts, at least during the in-school years. The private sector and industry should also be encouraged to sponsor and bond students for their organizations. This can supplement government effort to support as many students in Higher Education Institutions as possible.
Higher Education Student Finance Board (HESFB) should institute a sound financial management system including setting appropriate interest rates to cover inflation, thus maintaining the capital value of the loan fund and covering administrative costs. This should be done in addition to the awareness campaign on the obligation to repay which is proved arising out of this study, as it resulted in a big proportion of respondents being willing to repay the loans.. In the same vein, more other measures need to be taken to ensure effective recovery by HESFB: adequate legal frameworks to ensure that loan recovery is legally enforceable, effective loan collection machinery, and using either commercial banks or debts collectors to ensure high rates of repayment and minimize default which will be a direct policy as far as SDG4 (Government of Uganda Vision 2040 agenda) and informing policy review are concerned.
CONFLICT OF INTERESTS
The authors have not declared any conflict of interests.
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