The government of Uganda is planning to deduct up to 30% from the monthly salaries of student loan defaulters.
This is part of the government’s efforts to force the loan defaulters to clear their balances.
The Higher Education Students Financing Board (HESFB) is planning to recover about Ksh32 billion in the next six to twelve years from 3090 students who have failed to clear their loans. The government will track down the loan beneficiaries who graduated in 2014.
HESFB is planning to write to employers both in the public and private sectors to make sure their employees who failed to clear the loans.
The move will see those students who studied on government loans experience more deductions on their salaries. The loan deduction will be an addition of PAYE, the five percent National Social Security Fund (NSSF), and the Local Service tax deducted already being deducted from their salaries.
HESFB spokesperson, Mr. Bob Nuwagira noted that some loan beneficiaries began repaying their loans as early as when they were still in school.
“The parents help this category in repaying small amounts such that by the time they finish school, their loan portfolio is small. Any monies paid in before the end of the grace period does not attract interest,” he said as reported by the Daily Monitor.
The Higher Education Students Financing Board was established in 2014 to provide loans and scholarships to students who qualify to pursue accredited programs in Uganda’s recognized institutions of higher learning.
The maximum repayment period of this loan is twice the duration of study plus one year grace period. The period can, however, be revised if the loan beneficiary fails to get employment within the grace period.
If the repayment period elapses without the loan being cleared, it will then attract higher interest rates.
