Youth & Education | SLB REFORM
Make payments easier by lowering interest rates, extending repayment periods and calculating loans on the reducing balance
SLB Extends Grace Period For Repayment
The Students’ Loan Bureau (SLB) grace period for repayment of loans by borrowers has been extended from six to 14 months
This was announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, during his opening presentation in the 2020/21 Budget Debate, which got under way in the House of Representatives on Tuesday (March 10).
Dr. Clarke said the extension will apply to tertiary students graduating as at the end of the 2018/19 academic year, and all future borrowers.
Budget Debate: Reduction in Students' Loan Bureau interest rates
Minister of Finance and the Public Service, Dr Nigel Clarke today announced a lowering of interest rate for eligible borrowers with the Students' Loan Bureau (SLB) effective at the start of the new financial year.
The minister who was making his contribution to the 2019/2020 Budget Debate at Gordon House said that those students in good standing will get a two percentage points reduction in interest rates.
The interest rate for post-graduate students will be lowered to 7.5 per cent down from 9.5 per cent, while Pay-As-You-Go loans have been lowered to four per cent from six per cent.
In the meantime, people with student loans working for a registered charity will get a 10 per cent reduction on loan for each year employed, the minister said.
SLB Implements the Reducing Balance Method of Interest Calculation
The Students’ Loan Bureau (SLB) implemented the Reducing Balance Method (RBM) of interest calculation effective April 1, 2016, therefore all loans will be computed on this basis, going forward.Under RBM, interest is calculated on the outstanding balance whereas under the Add-on method, interest is computed on the principal amount borrowed.
The SLB also implemented a dual interest rate regime effective April 1, 2016. In that regard interest rates will be applied on the RBM basis as follows:
- 7.8% on loans during the in school years (Moratorium period), and
- 9.5% on loans in the Repayment stage (student graduated).
Consequently, the average interest rate on student loans under RBM is approx. 8.6% effective 1 April 2016.
This will result in significant savings for beneficiaries, compared to the previous Add-on interest rate of 9% which is equivalent to 14-15% under RBM. The monthly amounts payable by beneficiaries under RBM will be reduced by approximately 28%, as such payments will be more affordable. The reduction in interest rate is expected to positively impact the SLB’s collections rate and by extension, the reflows to the Revolving Loan Fund for on-lending.