By Petrina Francis, Education ReporterLENICE BARNETT, executive director of the Students' Loan Bureau (SLB), said on Tuesday that the Bureau is considering reducing the 16 per cent interest rate it currently charges students on its loans.
But that 16 per cent added on loans amounts to an effective rate of just over 28 per cent per annum. Loans at the SLB were offered at six per cent per annum simple interest before the 1984/85 academic year, but a fundamental change came about in 1996, when a low interest World Bank loan was converted into a grant, but with certain stipulations. That agreement changed the way in which the SLB functioned.
"I want to say publicly at this time that we have to review it," Mrs. Barnett said. "We have to remain concessionary."
ANALYSING THE SITUATION
She said the rates must be set in relation to what is going on in the financial market, "and the market is definitely trending down."
She was speaking on Tuesday during an interview on The Gleaner/Power 106 Independent Talk, with host Ronnie Thwaites.
Asked directly whether the rates would remain at 16 per cent, Mrs. Barnett said that the Bureau is at present, conducting an analysis of the situation. She said, "It is hard for me to say where it will stop but we would like to take it below 16 (per cent)."
The executive director pointed out that the rates have in fact been trending down over the years but noted that it is not decreasing as fast as many would like. The rates soared in 1997 to 21-23 per cent add on in 1997 before falling to 18 per cent in 2002 and then to 16 per cent.
The Bureau still has a "comfortable rate," as an assessment, which was done about two weeks ago, revealed that the rates remained concessionary relative to commercial lending rates. But she said, "There is so much talk about it and if it is going to impede students from borrowing we certainly don't want that."
