INDEPENDENT public policy think tank Caribbean Policy Research Institute (CaPRI) has scoffed at suggestions that the Government fully fund tertiary education here, proposing instead an income-contingent loan model that could even have a built-in mechanism for collecting from beneficiaries who migrate, leaving their guarantors holding the bag.

The recommendation of a student loan scheme in which the repayment is based on how much income a graduate earns is the “most important recommendation” of CaPRI’s latest study launched on Thursday night and titled Footing the Bill: The Hard Choices for Financing University Education.

According to CaPRI, the “legacy of the Jamaican sense of entitlement… to the Government paying for their education needs to stop”. A university education, it is insisting, should be paid for by the individual benefiting from it.

“This can be done with a student loan system that factors in the social and economic realities of the Jamaican and Caribbean societies that considers that all students, even the poorest, will be able to pay for a university education over their lifetime. The ideal loan model would allow students to gain access to tertiary education without the risk of unpayable debt, and would provide liquidity to universities that would allow them to provide high-quality education, thus creating a pool of skilled workers to the country and community,” CaPRI researcher Shana-kay Chisholm said in presenting the findings.

According to CaPRI, the proposed “income-contingent loan scheme, which is a suitable model for Jamaica, shifts the risk to the lender. This way, if the student ends up in a low employment-income job or becomes unemployed then the debt service obligations automatically adjusts”.

The think tank says under the scheme, students would choose between paying their tuition upfront or deferring payments. The debt would be recorded and linked to a student’s Taxpayer Registration Number (TRN). When the student graduates, or for any other reason ceases studying, they would start making contributions contingent on their income. The contribution would be collected by employers based on the borrower’s income, just like an income tax or any other social contribution.

Noting that an important prerequisite for this or any other student loan scheme in Jamaica is that repayment should be collectible from immigrants, CaPRI said there would need to be a bilateral or multilateral agreement between countries that receive Jamaican migrants regarding the payment of the loan.

“In all, there is no such thing as free education — someone has to pay for it, and the only sustainable way is to make it easy and flexible for students to pay,” the report stated.

On Thursday, CaPRI’s Executive Director Dr Damien King, addressing the matter of management of the scheme given Jamaica’s huge informal sector, said this is where the TRN would prove invaluable.

“The loan, in the first instance, is connected to the person’s TRN. And even if you work in the informal sector, because of your TRN you interface with State agencies throughout your life, so you can’t avoid your obligation. You can’t go missing just by being self-employed; you have to go missing entirely — not using the public services, not renewing your driver’s licence — for you to escape entirely by just being informal. At any interface with the State where you need to produce your TRN, then you can be held accountable,” he pointed out.

Damion Brown, group chief investment officer at Jamaica Money Market Brokers, commenting on the proposal said “The reality is that if we can get those mechanisms to make it practical, then it can be a solution.”

“Part of the issue is to ensure that there are the right incentives as well. So, create the right incentives for the students but, depending on how it is configured — which are some of the issues we are having now — ensure that there are the right incentives to collect assiduously and that there are the right incentives for the students to choose programmes that either align with their life goals or in terms of value-added that’s generated over time and aligns with what the Government and the private sector needs in terms of skill sets,” said Brown, who was part of the 2020 Education Transformation Commission chaired by Professor Orlando Patterson.

King, commenting further, said, “The solutions we are proposing are not without their problems. There are practical and process-determining details to be worked out, especially in relation to the migration problems. There is some work to be done in the details but what is laid out here is a broad approach that certainly can be pushed further than what has been done so far.”

In the meantime, he said Jamaica has not been able to surmount the issue because it has spent time pursuing “what should have been foreseen to be unviable solutions”.

“Free tertiary education was one of them because free tertiary education ultimately resulted in The University of the West Indies not getting the resources it needed to sustain and reproduce itself — and the quality nosedived. It’s not, ‘How can it be free?’ It’s really, ‘Who is to pay for it?’ CaPRI’s proposal is a student loan for which the repayment of that loan is related to how much income the graduate earns,” King stated.

“So if the graduate becomes unemployed, the service of that debt automatically goes into abeyance. If he ends up with a lower-paying job than he aspires to, the debt service is correspondingly lower. If things work out beautifully and he goes into a career path which is higher-earning, he can pay off the loan more quickly,” he added.

The UWI is the premier provider of tertiary education in Jamaica. The school, which is presently funded in part by tuition fees and a direct grant from the Government, is, however, facing serious shortfalls in funding that threaten its viability as an institution.

According to CaPRI, the Government’s attempt to offer citizens free education for a period, beginning in 1973, left the university in a paralysed financial state which has continued for decades. Under that regime, the Government paid not only tuition fees but living expenses. There was a huge increase in the enrolment numbers by 429 per cent.