Student Loans: the Plight of Students and Guarantors

The Ghana Students Loan Trust was established in December 2005 to replace the Social Security and National Insurance Trust (SSNIT) Students Loan Scheme under the Trustee Incorporation Act 106 of 1962 to provide financial resource for the sound management of the Trust and for the benefits of students and to promote national ideals as enshrined in the 1992 Constitution. But my grouse against the scheme emanates from the fact that the transfer of responsibility from SSNIT to the Students Loan Trust Fund has only been the change of name with the same obnoxious terms and conditions which incarcerate both would-be graduates and their long-suffering guarantors, especially if the beneficiary’s parents are not SSNIT contributors—which is the situation of many Ghanaian parents.

The various efforts to set up a loan scheme for students started in 1971 but were abandoned the following year due to the change of government. The scheme was then modified and reintroduced in 1975 but failed as a result of high rates of defaults until the visionary aptitude of Dr Rawlings (Rawlings’ detractors will certainly not be contented with my use of his official title of “doctor” and his being a visionary leader) reinstated it under a Provisional National Defence Council (PNDC) Law 276 in January 1988. The fact is I do not mince words to castigate Dr Rawlings but I have also chosen not to be blind to the good he brought to bear upon Ghana unlike those who perceive his every action as devilish. Every student who has had the privilege of university education with the aid of a SSNIT Student Loan should be grateful to the then Chairman Rawlings and his PNDC government.

The purpose of the Student Loan Scheme was to supplement students’ private resources of parental support for food, lodging, transportation costs and other expenses. But no one has really tasked the government on the other similarly momentous issues on the loan apart from its primary aim of helping students secure power (education) and the hoax of brighter futures—one could spend years studying and still remain jobless which is why I think the much-advertised brighter future is only a high-flying deception. The crucial concerns are in the areas of the loan processing, the exorbitant interest rate which can best and benignantly be described as extortionate and the unwary gagging of guarantors who literally sign their lives away in their bid to assist the proverbial “brilliant but needy student”. I am of the view that student finance and funding ought to be properly reviewed, made humane for the men and women who will one day serve or lead Ghanaand also made to reflect the much talked-about globalisation.

Ghanahas proved to her citizens, Africaand the whole world on how she intends to distinguish herself in the present century. Ghana’s examples of wanting to be the shining black star of sub-Saharan Africa are: the oil find (ironically thanks to Tsatsu Tsikata) and the expectations greater than those of Pip, the West African Gas Pipeline, rumours about electronic voting and an audacious venture at quasi-social housing commencing with the much-maligned and rightly vilified STX Housing agreement whose future is as bleak as the Ghanaian student in his final year. The plethora of arguments against this contract calls for an un-bigoted reconsideration but everything in Ghanais regrettably seen through the unbridled political lenses of the NPP and the NDC.

Politics in Ghanais well structured in a way that exceedingly ham-fisted people are either elected or chosen to lead a gullibly vulnerable people with the shortest of memories. Politicians are effectively selling Ghanawith their undisguised mortgaging of our country and her resources—oil, cocoa, gold, etc. They are visibly doing this by taking loans from Chinaand signing housing deals with communist countries whose conditionalities are plagiarised from the devil’s own book of lending ethics! I heard the NDCpropaganda theorist in the stature of Mr Allotey Jacobs (what a name!) animatedly proclaiming how Professor Atta-Mills was bringing a total of $13 billion from China as if that money were a Christmas gift. The experts claim that Ghananeeds $1.2 billion to fix her ceaseless water problems. Will it therefore not be the right thing for a social democratic government in the calibre of the NDCto fix our water predicament before undertaking such an imprudent housing deal? The inevitable actuality of the housing deal being a huge drain on an already unfortunate water crisis should the STX Housing deal be rectified and finally signed does not seem to have dawned on the Mills-led NDCgovernment.

Sometimes certain declarations are like stating the obvious but if the apparent is overlooked, I would then like to reiterate it to the discomfiture of those who take the decisions that affect all of us. Ghana ought to note that her future, her ambitious resolve to be a middle-income country all depend on her human resource—to wit, her citizens. These people must be motivated and incentivised to inculcate in them patriotism, the willingness to sacrifice and contribute their quota to the development of their motherland. At this point, some level-headed person is thinking what happened to the desire to ask what one can do for their country and not what their country can do for them as advocated by J F Kennedy. Well you are right; but that was said in the USin the 60s and not in Ghana. Make no mistake: only a handful of people in the world today have nationalism imbued in them for them to want to ask this very imperative question.

The criterion for qualification for a student loan is students enrolled and pursuing approved courses in tertiary institutions in Ghana. Until 2002 when the Government of Ghana included students from the emerging and ever-increasing private universities, the loans were meant for students in public universities and polytechnics. The application process, apart from pursuing a so-called approved course (I am yet to learn of an unapproved course), entails an applicant finding three guarantors to sign or thumbprint. If anybody has taken the trouble to look at the interest rate charged on student loans, they would have been misled into reading a fallacious statement to the effect that the “Government of Ghana pays the remaining portion of the interest on the loan which is the difference between the average Treasury Bill rate for the year and the student’s portion”—whatever that means. But in the same text, one will notice a paradoxical statement: that “the indebtedness of each borrower shall be the principal loan and the student’s portion of the interest on the loan”.

It is pretty lucid that the powers that be must be told that changing the name and the administrator (I learnt it is now liaised with the Ghana Education Trust Fund) of the Student Loan Scheme without seeking to address the countless inconveniences and outmoded conditions is tantamount to clothing a chimpanzee in a three-piece suit and expecting it to deliver a speech! There is nothing in a name here unless extremely humane and significant changes are applied to reflect the Ghanaian student’s situation. Amendments are required in the areas of interest rates charged on these loans, the unnecessary heavy-handed hounding of guarantors and the haunting of unwaged students to reimburse their loans—students who may certainly complete their studies and scrounge around for non-existent jobs. What justice does the government think of when it starts charging interest on monies students expended to help prepare them for a job market which is plagued by the incurably cancerous whom-you-know syndrome? And when these ultimate graduates have no jobs after four years of studies and so no means of earning a living, how are they expected to set aside a disposable income to repay a national debt?

Nonetheless, it must be reiterated that the current predicament of the guarantor of a student loan in Ghanais deplorable. Guarantors are retched by a culture which coerces them to do what is beyond them; and they are further intimidated and bullied by the Government of Ghana if graduates are unable to settle their loans. Take this scenario for example: a poor “koko” seller whose ward happens to be one of the numerous “brilliant but needy students” makes the required grades to pursue further studies at the university. Our noble woman then goes to see three men who qualify as guarantors to help our brilliant protagonist to pursue further studies to become a lawyer, a doctor, etc, in order to recompense his mother in future. Do any of us—knowing the obnoxious terms and conditions of student loans—advise these honourable men not to help?

Therein lies the dilemma of the guarantor! Even if these guarantors aware of the hazards of guaranteeing such a loan, our societal accepted constitution will not allow this. Anybody, who looks at the conditions and decides not to endorse a student loan as a matter of principle may have been prudent; but, in the tenets of Ghanaian custom, such a person may have carved a niche for him/herself as the most callous and inconsiderate fool to have roamed this earth. Thus, to gain the general approbation of society these government-workers are implicitly coerced into signing their lives and pensions away—but that is only the beginning of their calamitous and outrageous woes! Sometimes, the reluctance with which they sign is evident in the trembling of their hands, the quivering of their lips and the contortions of their countenances. These scandalous afflictions are only cut short if by the good hand of Providence, some graduates into whose hands they lay their pensions and lives find jobs which are lucrative enough to empower them to pay off their loans. Or if these graduates join the long train of the incessant mass exodus to Europeand the USin search of pastures green enough to make sense of the grass possessing that most sought-after colour on the other side.

In effect, guarantors thus become the inescapable victims of government insensitivity, the towering unemployment situation in Ghanaand its knock-on effects of defaulted loans. This means that a student’s inability—I will not say reluctance when it is clear they do not have the means to furnish their loans—to adhere to the somewhat draconian terms and conditions imposed by the Government of Ghana subjects a guarantor to the most atrocious persecution anyone can fathom with the highest stretch of the imagination. The bullying, as we are all aware of, takes the form of the forfeiture of pension/retirement benefits until such a time when a loan is settled. The only crime committed by guarantors is by working to build and contributing to the welfare of a country which rewards them with tremendous impertinence. Their problem is that they decided to be nationalistic and followed the culture of their community by going the extra mile of helping Ghana’s workforce by signing loans for students who will replace them on retirement.

The repercussions of the horrendous terms and conditions of student loans have the propensity to breed corruption among graduates who find jobs, in their precipitation to diminish their ever-augmenting student loan debt by adopting the shortest route of bribery. It also contributes to human capital flight or brain drain; with those who are unfortunate to find gainful employment in Ghana. Without any fear of contradiction, I can say that a graduate who completes their studies with a 2000 Ghanaian cedis debt already hanging on their neck with possibly no chance of finding a job in Ghana is highly likely to join the bandwagon of planes and ships—lawfully or criminally— bound for the US or Europe in search of the eldorado of greener pastures.

I recently chanced upon an incredible but depressing tale of a graduate who was arraigned before court for not settling his SSNIT student loan in full. This action was necessitated by the deceased’s relatives trying to retrieve and usurp the dead man’s pension entitlement—the crucial moment of wanting to benefit from the death of a forgotten relation who had little sympathy while alive. It was at this juncture that it dawned on the expectant and anxious family members who had already budgeted superfluously for the deceased’s pension that the money will be released upon the settlement of an outstanding student loan which stood at 1,678.19 Ghanaian cedis.

This pathetic non-fiction was the quandary of a graduate who refused to be lured by the great enticement of seeking white-collar jobs and greener pastures in Europeand the US. On the flip side, a course mate of his who had recently returned from Europe and was exuding the pomp and pageantry (flashy trainers, an expensive watch, a nicely-cut buggy jeans with blings a la Snoop Dogg) of a been-to was in town. Throwing his weight about in a clear unsolicited exhibition of his newly-acquired affluence, his mate proclaimed to him with some gusto that he had settled his student loan with just £700! This did not seem a lot until the conversion into cedis confirmed it was more than twice the 6 million old cedis he borrowed. What an easy way of enticing people to become economic migrants even at the peril of their lives and disinclination to become illegal migrants!

In the West, student loans are charitably flexible. The UKcharges 4.4 percent on student loans and it is 4.5 percent in the USwhereas in Ghana, the interest charged is ludicrously set at 12 percent! The USand the UKare developed countries with a behemoth job market which absorbs their graduates. The even-handedness with which student loans are administered in the West removes the stigma of debt from graduates as they have to be working and earning certain salaries before commencing repayments. In the UK, my research shows that a graduate has to earn £288 per week, £1250 per month or £15000 annually before deductions are made for student loan repayments. Of course I do know these are advanced countries but Zimbabwecharges just 5.06 percent on student loans.

The UKis now asking for highly-skilled migrants so it is unambiguous the West desires the crème de la crème of Ghana’s workforce. The days of factory work, warehouse work, apple-picking or tomato-picking which were reserved for migrants from Africa are over—the Poles, Romanians, Bulgarians, Hungarians and their counterparts from Eastern Europe have been drafted in to do these jobs. Our politicians should walk the talk and forget their frenzied and ne’er-do-well promises on electoral campaign platforms. The slogan should be jobs, jobs and jobs! Forget IMF and World Bank loans whose ruthless conditionalities forbid the employment of people in the public sector—thank you Professor Atta-Mills for being thoughtful and benevolent!

The Student Loan Scheme has unfortunately been prioritised as a money-making endeavour by government. The copious private universities are doing their fair share in the mass production of jobless graduates who inexplicably contract more debts to pursue Master’s degrees with no job experience. My take on this is: if government were to make it its policy not to charge any interest until a graduate was employed, it would be cajoled into creating jobs for these graduates without having to involve guarantors with cut-throat conditions. And whoever assumed that education in Ghanais subsidised must think again. What with borrowing 600 cedis and paying back 1,754 cedis in five years! One will not be exaggerating to state that the Government of Ghana is unquestionably making money at the expense of unemployed graduates and sitting on pensioners’ monies for the non payment of student loans.

It must be noted that I am not in any way proposing that government should dole out these monies and never expect them to be reimbursed. But I am requesting that opportunities should be made available to these graduates so that they can work and start paying off their loans. After all, student loans in the USand Europeare not free. It is about time the Government of Ghana reviewed the Student Loan Scheme and cut out the need for guarantors. Students and graduates who are undoubtedly the future leaders of Ghana should be treated with some respect and not like some common lowly scoundrels who may disappear with Ghana’s money which is why the need for guarantors to serve as scapegoats arises.

Thomas Dickens ([email protected]) www.thomasdickens.blogspot.com