Study now, pay later

Last Wednesday in my column responding to the suicide of the UP Manila student, I wrote that the government should seriously consider an educational loan system, one which will allow repayment after the student has graduated.

When I was writing that I did have memories of some kind of “study now, pay later” program from years back, but because I was rushing the piece, I didn’t have time to research. After my column came out in the Internet Jao Romero posted a comment recalling such a program, but the problem was, he said, there were many people who didn’t bother to pay back, “so the foundation collapsed.” His mentioning a foundation suggests it wasn’t a government program. Nimrod Suarez also wrote that “UV has a study now, pay later program” from which many have benefited and which is still going strong. I presume this is the University of the Visayas.

“Parengtony” wrote about US President Barack Obama’s educational loan program, which allows students to pay back loans starting six months after graduation. Monthly payments should not exceed a certain percentage of the graduate’s monthly salary, and loans may be “forgiven” after a number of years.

SSS, GSIS loans

All those comments got me to look into the Internet, and I did find that both the Social Security System and the Government Service Insurance System offer educational loans. They’re very restricted but they’re still options, so let me describe them in broad strokes. There’s a website from where you can download the application forms, wonderfully brief but still in English, and with some vague language that may intimidate applicants, so I suggest that Inquirer readers offer to help out poorer relatives or friends.

The SSS loan is, as usual, better than that of the GSIS. You may borrow up to P15,000 for a degree course and up to P7,500 for a technical/vocational course. Half of the loan amount is covered by the national government and the other half by the SSS, with 6-percent annual interest. The requirement on the beginning of the repayment time is a bit bizarre: 18 months after the loan for schools using semesters, 15 months for trimesters, and 14 months and 15 days for quarters.

A major limitation is you may borrow only once. The eligibility conditions are quite wide, though, so I can imagine different members of a family coming in to help. You may borrow if you yourself are an SSS member, or an SSS member may borrow on behalf of any of the following (hold your breath now): “legal spouse, child (including illegitimate), the sibling of unmarried SSS member (including half-brother/sister).” I just have to comment, with a smile: Except for the “legal spouse” provision, I think this is one of the most socially progressive government documents I’ve ever seen for the Philippines.

As with other SSS loans, you are eligible only if you’ve made at least 36 monthly contributions, three of which were in the last 12 months. Your last posted monthly salary credit should be P15,000 or less, and you should be up to date with other SSS salary/housing loans.

The SSS educational loan form may be downloaded from: www.sss.gov.ph/sss/uploaded_images/forms/normal/Educ_Loan_App_Form_060112.pdf. Note that after you access it on the Internet, you still have to download it, clicking on an arrow icon on the upper right hand corner of the Adobe Acrobat form.

Let’s get to the GSIS educational loan. This one was launched only last year and was supposed to have ended on Dec. 28, 2012. I could not find information on the Internet if this has been extended, but I hope it continues to be available. I also found an announcement posted last week on the website about a new scholarship program for 2013-2014, for tuition up to P20,000 and a monthly stipend of P2,000.

The GSIS loan is available to “all active members regardless of salary, length of service and status of the agency and member accounts” but there is no information on the beneficiaries.  You may borrow up to P4,000, payable over five years at 6-percent interest per year. The GSIS gives the actual repayment scheme: P20 per month (you read right, P20) for 59 months, and a grand amount of P4,020 on the 60th month.

Here’s where you can download the GSIS form: www.gsis.gov.ph/default.php?id=274.

Accountability

The SSS and GSIS educational plans look more like emergency loans. It’s better than nothing, but we still need a stronger loan program that can put students through school.  There is, certainly, the risk of defaulting on (or escaping from) repaying the loan, but unless the government wants to provide education for free, it has to come up with options for those who want to go to college but lack the financial resources to do so.

Another alternative is a work/study program, but the ones that do exist are extremely limited. UP has student assistantships for undergraduates that offer a maximum of P2,000 a month and graduate assistantships that go up to P4,000 a month. But the numbers are very limited—usually one student assistant and one graduate assistant per department. What happens then is that students have to look for outside work, ranging from very low-paying jobs in sales or as food attendants, to the more lucrative call centers where they sometimes earn more than their college instructors.

Whatever the program may be—government or private, institutional or individual—assistance should always include counseling for the beneficiaries, checking on how they’re doing academically, and more. From personal experience, I do worry about accountability. I have had scholars who whine about their limited funds even as I spot them toting a new imitation designer backpack, or two cell phones. The students need to be taught budgeting, and to take certain responsibilities: I require mine to enroll in SSS and PhilHealth and to pay the premiums out of their stipends. Once they avail themselves of benefits, they realize how small the premiums are, and that those trips to the SSS and PhilHealth offices are well worth the time.

One reader from the United States who offered scholarships had a requirement in addition to a minimum grade point average for those she would support: They should not have boyfriends or girlfriends during the scholarship. I know it may sound extreme, but I can see where she’s coming from, knowing how many students waste their scholarships because of an unintended pregnancy, having to stop school and, often, never resuming their studies.

Scholars and loan beneficiaries have to understand they benefit at the cost of others who may be as deserving, if not more so.

I have had disappointments with scholars but I have also seen behavior that can only be described as heroic—scholars who manage to stretch their stipends to help other members of their family. I have scholars, too, who keep in touch years after their graduation, a few now raising their own families and yet managing to set aside money to help nonrelatives through school. As far as I’m concerned, that’s the best “study now, pay later” scheme one can have.

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