Challenges in Student Loan Management: Audit Findings & Recommendations
Explore the findings from a performance audit on student loan management by the Students Loan Bureau in Jamaica, highlighting issues like high approval rates with declining disbursements, increasing non-performing loans, and reliance on government subsidies. Discover the impact on loan sustainability and borrower delinquency.
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Presentation Transcript
Loans Management at the Students Loan Bureau AUDITOR GENERAL S DEPARTMENT, JAMAICA - PERFORMANCE AUDIT September 2018
Our Rationale for the Audit Student loan funding is critical to Jamaica s attaining its Vision 2030 National Development Plan (NDP) target of a gross enrolment rate at tertiary level of 50 per cent by 2030 and the UN Sustainable Development Goal No. 4 to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Labour market conditions such as unemployment, underemployment and migration as major causal factors of borrowers delinquency, which, which is negatively impacting student loan repayment.
The audit sought to determine whether I SLB managed its loan collection and enforcement activities meaningfully to the sustainability of the Revolving Loan Fund. to contribute
High approval rate for Loan Applications SLB approved 96 per cent of applicants for the five-year period 2012-13 to 2016-17, which accorded with its mandate to provide affordable financing to students pursuing tertiary education. However, only 54,363 or 77 per cent accessed a total of $17.02 billion, with annual loan disbursement averaging $3.4 billion.
Declining Loan Disbursement At the same time, the number of beneficiaries accessing student loans declined by 17 per cent to 9,742 in 2016-17 from 11,512 in 2012-13. 25,000 70% 60% 20,000 Value of Applications 50% 15,000 40% 30% 10,000 20% 5,000 10% 0 0% March 2013 March 2014 March 2015 March 2016 March 2017 February 2018 Financial Years Value of Loans in Repayment ($ Mn) [Net of Write-off] Value of Non-Performing Loans ($ Mn) [Net of write-off] Total Collections & Repayments ($ Mn) % Value of NPLs to Loans in Repayment ($ Mn)
Non-performing loans (NPL) increasing NPLs increased to 58 per cent of the loan portfolio at February 2018 from 33 per cent at March 2013. we found that borrowers were fast becoming delinquent as evidenced by 62 per cent or $2.75 billion of loans due for initial repayment commencing January 2016, becoming non-performing within 12 months.
Increased reliance on GOJ subsidy Proportion of GOJ Subsidy to Fund Disbursements The growth in non- performing loans and write-off of uncollectible loans totaling $2.5 billion, adversely impacted SLB s liquidity position; consequently, there is an increased reliance on GOJ subsidy to support loan disbursements, which rose to 91% by March 2017. 4,000 100% 90% 3,500 80% 3,000 70% Value of Application 2,500 60% 2,000 50% 40% 1,500 30% 1,000 20% 500 10% - 0% March 2013 March 2014 March 2015 March 2016 March 2017 GOJ Funding TOTAL LOAN DISBURSEMENTS PER ANNUM GOJ Funding as percentage of Disbursement Linear (TOTAL LOAN DISBURSEMENTS PER ANNUM)
As a matter of priority, implement a robust loan management system to allow for the timely finalisation of loan receivables. Solicit MoFPS support to develop a roadmap for achieving the long term sustainable funding of tertiary education. Review loan collection and enforcement strategies, including the guarantor system, to reduce loan delinquency
