Prof Williams backs new loan model for university students
Published:Wednesday | September 21, 2022 | 12:09 AM
Pro-vice-chancellor and principal of the Five Islands Campus of The University of the West Indies (UWI), Professor Densil Williams, is pushing for the introduction of an augmented income contingency loan model in order to increase access to students who are unable to fund their tertiary education upfront.
Having made the proposal to governments with UWI campuses, the senior management of The UWI has indicated that the ball was now in the court of the regional governments to make a determination on the implementation of the loan model.
Under the proposed scheme, students will use their acceptance status into a university as the only collateral to secure the funding to attend the tertiary institution.
Addressing members of the Human Resources and Social Development Committee of Parliament on Tuesday, Williams stressed that repayment of loans would be based on the learner’s ability to pay when they graduate from university.
Describing the augmented income contingency loan model as a far-reaching proposal, Williams said that The UWI has received strong take-up from students.
He noted that tertiary education is currently funded in a short-term manner, comparable to a 15-year or 20-year mortgage.
“You take out the loan and you have to pay it back, irrespective of whatever income you make,” said Williams.
The UWI pro-vice-chancellor said that the student is expected at the end of the course of study to be able to generate funds to pay back the loan.
“So your job becomes the collateral at the back end,” he added.
Giving details on how it would work, Williams said that a student who gets into medicine, for example, would not have to pay upfront the tuition fees but noted that the income augmented model says that the Students’ Loan Bureau, or a private-led bureau, would pay the required fees.
“What you will see is that you have already moved away from the mortgage-type loan to, say, five years’ time to repay 10 per cent, and so on. What it will do is to give a greater flexibility to the student in order to pay this,” Williams explained.
The pro-vice-chancellor argued that the model could provide a new asset class for investors because pension funds that have a longer investment life cycle could find this attractive.
“This is great for them because a pension fund that is going to be investing in the loan bureau today is not expecting a return only for tomorrow, but is expecting a return for the next 40 years down the line,” said Williams.
“All these pension funds around the place that have all of these monies and looking for something long term to invest in, you invest in education. Your return is almost guaranteed because the chance of somebody graduating university and not getting a job is very slim.”
The UWI has a total of five campuses across the Caribbean: Mona, Jamaica; St Augustine, Trinidad and Tobago; Cave Hill, Barbados; the Open Campus; and the Five Islands in Antigua.