The Montego Co-operative Credit Union (MCCU) offering J$3m student loan

Avia Collinder, Business Writer

The Montego Co-operative Credit Union (MCCU) is claiming that its student loan, which offers a maximum J$3 million at 14 per cent interest, is the nearest thing that Jamaicans will find to Students' Loan Bureau (SLB) funds.

Repayment begins at completion of study.

The cap on the loan opens the 'MCCU Students'Loan' facility to those doing expensive courses such as medicine and law. But the credit union says that to date, the average loan size has been J$600,000.

The funds are distributed in tranches, and while the starting price is 14 per cent interest on the reducing balance, MCCU says a review will be done annually and the interest rate adjusted based on market conditions.

According to Lorna Clarke, marketing manager at the credit union, members applying for the student loans will be required to provide collateral, or two guarantors who are willing to provide tangible security.

"Where no security is available, the guarantors will need to sign a full payroll deduction form to enable us to collect if the loan becomes delinquent," said Clarke.

low-income households

"In addition, the status of the guarantors will be checked semi-annually to ensure they are still in a position to repay. If any of them is unable to do so or cannot be found, all further withdrawals will cease and the borrower will be asked to provide another guarantor or some other form of security before withdrawals can be resumed."

The credit union student facility covers tuition, books, computers and other education aids, and fills what Clarke describes as a gap in the income groups assisted by the state-operated SLB. The agency largely targets students from low-income households.

The credit union, she says, offers full financing for the course up to the loan cap, with disbursements on a semester or yearly basis, depending on the applicant's request.

The tuition is remitted directly to the school.

The programme provides assistance to students at all approved tertiary institutions, as well as foreign colleges, but in the latter case, the terms vary.

"If a student wishes to study overseas, his/her parent will be asked to take the loan and make payments while the student is studying. These loans will have a maximum repayment period of six years," Clarke said.

"If the course is an online one, it will be assumed that the student is employed and will, therefore, fall under the part-time programme."

All draw downs on the loan will be conditional on the member maintaining an excellent credit history on this and all credit facilities held with the credit union, the marketing manager added.

Repayment begins six months after graduation, allowing time for job search. The borrower gets six-12 years to repay.

avia.collinder@gleanerjm.com