The Ministry of Education is owed about N$375m in loan repayments by former students who accessed the educational support from the Government since 1997 when the incentive was launched.
Students from previously disadvantaged communities usually apply for Government study loans through the Ministry’s Namibia Student Financial Assistance Fund (NSFAF) with the understanding that they will repay the money after finishing their studies.
Ministry of Education Public Relations Officer, Toivo Mvula confirmed the high default rate on their loans repayments noting unemployment as one of the major reasons.
“There are those that are genuinely unemployed and the NSFAF is very understanding, but need to be informed of the employment status of the former beneficiaries in order to freeze the interest paid on top of the loan during the time of unemployment. But there are those that are simply ignorant and do not want to pay back and I urge them to consult the ministry and begin with their payments,” said Mvula.
Mvula urged loan beneficiaries to comply with their obligations under their loan contract to avoid legal action which will result in them paying even more.
“Student loan holders sign a contract before receiving the loan. The contract obliges the loan holder to repay the loan after completion of studies. The NSFAF Act (No.26 of 2000) gives powers to the NSFAF to institute legal action if loan holders do not comply with the obligations under his/her contract,” explained Mvula.
According to him, before instituting legal action, the NSFAF first contact the beneficiaries by means of a letter and if no response is received from the beneficiary after the final demand has been sent out, the beneficiary’s file is forwarded to the Attorney General’s office for legal action.
“If the debtor is referred to the Attorney General’s Office, the amount to be re-paid increases, due to legal fees charged by the Attorney General’s Office,” warned Mvula.
Mvula noted that over the years, the Ministry has embarked on media and public campaign urging loan holders to repay the loan which has resulted in an increase in the number of loan holders approaching the Ministry to start repaying their loans.
The NSFAF determines the instalment the loan beneficiary should repay each month. At least 15% of the beneficiary’s gross annual income minus tax and pension contribution is used to determine the monthly installments.
Mvula said this amount can still be negotiated with the NSFAF if the loan beneficiary is unable to pay that specific amount.
“The loan recovery rate has improved tremendously and the NSFAF will continue to encourage loan holders to repay back their loans. The more the number of students who pay back their loans, the more money the NSFAF will have to assist more students each year,” said Mvula.