Compliant SLB borrowers to be rewarded
Borrowers of the Students’ Loan Bureau (SLB) who have been servicing their loans without falling into delinquency are poised to benefit from a reduction in interest rates.
Finance and the Public Service Minister Dr Nigel Clarke, in his maiden contribution to the Budget Debate in Gordon House yesterday, announced new benefits to SLB borrowers.
Effective immediately, eligible borrowers in good standing with the SLB will be entitled to a reduction in their interest rates of two percentage points, in keeping with the reduction in the Bank of Jamaica policy rate over the time since the last adjustment. For postgraduate loans, the rate declines from 9.5 per cent to 7.5 per cent per annum, while persons obtaining loans on the Pay-As-You-Go scheme will benefit from a two-percentage-point reduction, moving from six per cent to four per cent annually.
Clarke also announced that for new loans, application of payments would be made to the “most outstanding” balance first. “Historically, for decades, payments made to the SLB by borrowers have been applied first to penalties, then to interest, and finally, to principal. This is not in keeping with the practice of financial institutions, generally, and has the effect of making the SLB’s loans harder to service,” the finance minister said.
Under the theme of ‘Economic Opportunity for All’, Clarke said that payments by borrowers would be applied to “most outstanding” payment first.
The finance minister also unveiled a benefit for SLB borrowers in good standing with the lending agency and employed fulltime to registered charities. Borrowers falling into that category, according to Clarke, will have 10 per cent of their loan balance forgiven for each full year that they are employed fulltime to a registered charity, effective April 1, 2019.
Additionally, the finance minister announced that effective April 1, the Government would provide grant support of $3 billion to the SLB.
In the past three years, the value of loans disbursed by the SLB has increased by more than 22 per cent. In the 2017-2018 year, 99 per cent of applicants to the SLB were successful.