SENIOR executives from the University Hospital of the West Indies (UHWI) are suggesting that Government copy the United Kingdom model for student loan repayment instead of the current high interest approach which they say pushes graduate nurses below the minimum wage.

Addressing the weekly Observer Monday Exchange meeting of reporters and editors held at the newspaper’s Kingston offices yesterday, Dr Trevor McCartney, chief executive officer, medical chief of staff and dean of the Faculty of Medical Sciences, said interest rates which run from 12 per cent and above act at as “dis-incentive”.

“Loan repayment constitutes a major part of their salary. Five years ago a nurse applied to a nursing school which was in a hospital where there was accommodation, [the nurse was] trained free of cost and was given a stipend. Since 2004/05 you do a bachelor’s degree in nursing which you pay for, you obtain a student loan,” McCartney said.

“You graduate and your take-home pay is in the vicinity of $40,000 of which $30-odd thousand is repayment for the student loan.

“They come to me frequently with the same question, how can we work a system for them to live on $10,000 per month because they have these obligations to repay,” he pointed out.

“The whole paradigm has changed. No longer are you training nurses for low costs and supporting them, you are now offering them a degree for which they have to pay large sums and their remuneration does not allow them to

meet the minimum wage requirement,” Dr McCartney added. “We train over 300 nurses per year, and that’s not a problem, but if I was a nurse I would leave as well because you cannot repay $35,000 from $40,000 (and survive). It’s not possible.”

According to Dr McCartney, a system similar to that of the UK’s where student loans are repaid through the tax system, and only begins after the student has left higher education and is earning over £15,000 was worthy of emulation. The system, known as Income-Contingent Repayment (ICR), tapers the repayment obligation according to the gross income of the account holder.

“The UK recognises the dilemma graduates face in repaying their student loans and ties their employment to their loan so when you begin working you pay a particular sum forever so it does not impact on your survival on a day-to-day basis,” he explained.

“The interest rates need to be looked at. You can’t have a competitive interest rate for a loan as obtains at a commercial bank for a student loan. The interest rate should be miniscule to allow persons the facility of being trained,” he said further.

The UHWI executive said discussions with the Students’ Loan Bureau have been more or less fruitless, the only response being an invitation by the entity for persons to come in and renegotiate.

“There is no formal government process to address this issue,” he noted.

According to deputy chairman of the hospital’s board of directors, James Moss-Solomon, policymakers were missing out on a critical area.

“Certainly the description of the UK policy seems to be a way for us to look than looking at bankers because I do not really believe they are understanding the development banking aspect as a development function,” said Moss-Solomon. “They are understanding the banking function, which means here is a loan and they have to secure it and get a repayment, but there is a development aspect which has to be applied.

“I really don’t think the straight banking formula is going to get us the kind of results we need to provide satisfactory services, not only in hospitals but other areas as well,” he said.

The top executives made their observations even as the Government moves to make good on its pledge to undertake a critical review of the Students’ Loan Bureau.

Prime Minister Bruce Golding, speaking during the 2009/2010 Budget Debates in Parliament last May, said the Government intended to give special concessions to students pursuing studies in specific disciplines of which there is a chronic shortage in the public sector.

Golding said an initial list of disciplines to which this applies would relate to skills in the health and agricultural sectors.

In the meantime, the prime minister said starting this year, additional funds would be provided to the bureau to enable it to meet demands for higher loan amounts to meet increased tuition charges.

Noting further that the 12.5 per cent interest charged on student loans is “too high”, the prime minister at the time said while it was not possible to reduce that rate across the board last year, it was expected to be further reduced next year.

He said further changes are to be made to include extending the duration of the loan and realigning repayment with employment status and earnings as it was nonsensical to “hound” persons who are not employed for loan repayments.