THE Students’ Loan Bureau (SLB) is putting in place new systems for debt collection, as its bad debt portfolio remains unchanged from year to year.

The SLB indicated to the Jamaica Observer late last week that it has over $11 billion in bad debt as of November 30, 2021 ranging from being in arrears of 90 days to over 360 days. The majority over 90 per cent or $10 billion of the bad debts, are sums owing for more than 360. The amount is a problem persisting over time.

Bad debt balances as of March 2021 were $11.965 billion; this compares to $11.984 billion in March 2020; and $11.886 billion in March 2019. Individual, sub serviced loans outstanding range from a low of $100,000 to $6.1 million as the principal amount.

Nickeisha Walsh, executive director at the SLB, said, “Like other financial institutions, factors such as unemployment, underemployment, harsh economic conditions, migration, or a high debt/equity ratio for customers who have multiple loans, impact delinquency levels.” The lending agency has embarked on several initiatives to improve collections and reduce delinquency. She told the Business Observer, “The SLB is implementing a new loan management system that will enable improved monitoring and collections processes and allow beneficiaries to not only apply online but make payment, monitor account balances, and have easy access to information.

Other supporting strategies for improved collections include salary deductions orders for beneficiaries employed in the public sector. The SLB also encourages beneficiaries and their parents to exercise the option to commence repayment during the moratorium period (in school years) or reduce interest cost and ultimately, the monthly payment upon the loan entering repayment.

The SLB has also been encouraging the early closure of loans by offering incentives such as waivers of charges and fees. It has also increased the restructuring of loans to facilitate more manageable monthly payments by beneficiaries and consultations with various stakeholder groups to support the SLB’s collection efforts.

Asked if unpaid loans were principally due to unemployment among graduates, Walsh said that such data were “not readily available, as many factors have contributed to delinquency levels over the years.” She, however, noted, “All categories of customers are impacted by unemployment.”

Walsh noted meanwhile that delinquency levels are across all ATI’s (approved tertiary institutions), but are proportionally higher for institutions with the highest enrollment rates.

In the light of the novel coronavirus pandemic, the SLB adjusted its strategies by granting a deferral on loan repayment for three months (April – June 2021) to all loan repayment customers; and interest, insurance and late fees were waived during the loan deferment period.

Customers with moratorium loans were granted eight additional months to start repayment.

Walsh stated, “The SLB is aware of the financial challenges that have affected our beneficiaries and that this may affect our collection efforts. However, with these strategies, we encourage those who can pay their loans to do so, and as a result, there was an increase in collections compared to 2020/2021.”

The SLB currently provides funding for three loan products: Targeted, Pay As You Study (PAYS) and Postgraduate (PG). The Targeted product comprised approximately 95 per cent of the loan portfolio and benefit from an extended moratorium period (in-school years) before the commencement of repayment.

The PAYS loan (previously known as Parent Plus) and the PG loans are offered to persons seeking to further their education at undergraduate and postgraduate levels.

The PAYS loan facility caters to undergraduate students employed and parents/ guardians who may apply for the loans on behalf of their children or other relatives to pay their tuition fees whilst still in the programme. In addition, parents/guardians and others who may wish to apply for the loan on behalf of students can also access these products.

The executive director stated, “The highest delinquency levels are that of the targeted product, as PAYS and post-grad repayments commenced upon receipt of the loan.”

She notes that once the customer clears up all arrears and the customer’s account becomes current, the account will be reassigned internally not to be charged with other collection fees.