‘Dr Friday incorrect on national student loan programme figures’

Leader of the opposition New Democratic Party (NDP), Godwin Friday is being asked to get his numbers straight before speaking on certain issues, specifically, the numbers attached to the National Student Loan programmes.

Last week Monday, September 9, 2024, while speaking on his party’s New Times programme on Nice Radio, Friday said the interest rate for the National Student Loan programme is too high, and a New Democratic Party administration will reduce it to 4.5 percent.

“Somebody tell me they are paying nine percent interest. Could you imagine that, nine percent interest,” he said.

“So, we would cut that in half- four and a half percent, because we would finance it in a way to make sure that the people who get these loans are able to afford to carry them.

He said the way the loans are structured, an entire generation, “will basically be invested in paying off that student loan, and by the time you get around to start building a property and so forth, you in your fifties and you reach retirement…”.

But a person with intimate knowledge of the loan programme said that Friday failed to mention that the National Student Loan Programme is different from the National Disadvantaged Student Loan programme, and has a fixed interest rate of 8.5 per cent, which is set by the various financial institutions which have agreed to help administer this type of loan.

The individual said also that the National Disadvantaged Student Loan programme has recently had its interest rate reduced to 4.5 per cent, from the previous 6 per cent; none of the loans ever had an interest rate of 9% as mentioned by Dr. Friday.

“In 2020 during COVID, it used to be 8.5 per cent, and went to 6 percent with a one-year interest free waiver, and last year Independence, it was announced by the Prime Minister that it would be lowered to 4.5 per cent which this week the documentation to make it 4.5 per cent has been completed,” SEARCHLIGHT was told on Thursday.

The individual said as well that Friday’s statement about the loan being repaid while students are studying is also inaccurate.

“Only the interest is paid while the student is studying and they only pay on what they draw down per semester not on the money borrowed. They do not pay on the entire amount borrowed, only on what you draw down and if you don’t draw down the entire amount you don’t pay on the entire amount.”

Also explained is that before 2010, the programme was supported by funds from the Caribbean Development Bank (CDB), and the level of delinquency on the loans was higher than it is now.

“…since the company (the National Disadvantaged Student Loan programme) came into being, we have a different criteria, so a salary has to be assigned to the loan, so that is how we get the payments.”

The National Insurance Services (NIS) website explains that the maximum limit on a loan under the National Student Loan programme is EC$ 120,000 with interest of 8.5 per cent. The National Student Loan Programme was introduced in 1994 to provide loans to students who wish to pursue studies, and who, upon completion of their studies, are expected to contribute to the Economic and Social Development of St. Vincent and the Grenadines, the website further explained.

The Economically Disadvantaged Student Loan Programme was devised by the government in 2003 for students whose families do not have the assets necessary to secure student loans. This loan programme allows for students to borrow up to $120,000 without security (it is backed by the government), and is accessible to students whose household make under $40,000 per annum.

The National Student Loan Programme is available to persons whose household makes over $40,000 per annum.