Students’ Loans by Financial Institutions: The Way to Reduce a Burden for Government Funding to Higher Education in Tanzania

Abstract

Abstract. Students' Loans are Government Loans extended to students in Higher Learning Institutions (HLIs), these Loans has to be repaid back on or after expiry of the grace period (HESLB, 2004). The purpose of this study is to assess the feasibility of engaging financial institutions to partner with the Government in financing higher education by addressing the following objectives:(i) to determine whether there is policy consideration for students' loans provision by financial institutions (ii) to examine the readiness of the students in the higher learning institutions to be financed by financial institutions (iii) to investigate the readiness of the financial institutions to provide loans to students of the higher learning institutions. Data were collected through interviews, review of various documents and questionnaires in which 90 respondents were obtained 7 from financial institutions and 83 from higher learning institutions. Software package for statistical science (SPSS) and content analysis was used to analyse data, results of the analysis were presented in tabular form, frequency distribution table and the bar charts. It was concluded that financial institutions in Tanzania does not have the policy to support students' loans provision hence they are not ready, students' in higher learning institutions are ready to be financed by financial institutions. The study recommends that the financial institutions in Tanzania should establish students' loans provision policy in their operations, universities or colleges to include policy which allows students to seek for alternative funding for their education other than the Government. Timely repayment among Students for smooth operation of the financial institutions. Education by HESLB on the need for alternative funding from financial institutions. Financial Institutions for Higher Education Financing.

Financing higher education in Tanzania through students' loans scheme and its impact on equitable access

“…Kossey and Ishengoma [ 9 ], for example, noted that the government severally has been unable to allocate sufficient financial resources to enable loan schemes to meet their statutory obligation of issuing loans to needy students. Similarly, other pieces of evidence indicate that for three fiscal years from 2012 to 2015, the government set more or less the same amount of budget for student loans despite the increasing number of students enrolled in HE institutions and those who apply for loans each year [ 4 , 59 , 60 ]. Implicitly, many of those loan applicants failing to secure HELSB loans also fail to access HE which, consequently and inevitably, creates a social inequality between those with access to HE through government funding via HESLB and those whose access was constrained by the state's problematic funding mechanism.…”

“…Implicitly, many of those loan applicants failing to secure HELSB loans also fail to access HE which, consequently and inevitably, creates a social inequality between those with access to HE through government funding via HESLB and those whose access was constrained by the state's problematic funding mechanism. Such a challenge mirrors a similar trend to students' schemes in other African countries as these schemes operate on shoestring budgets that cannot cover their operational costs and absorb the rising cost of higher education and expanded enrolments in many universities [ 4 , 9 , 59 , 61 ]. Arguably, because Tanzania is a developing country with 28% of its population living under 1 US dollar a day, not all its citizens can afford to pay for their children's HE as its cost is higher than the average per capita income of an individual citizen.…”

“…As a result, the budget set aside for the students' loans, especially for first-time applicants, failed to cater for all loan needs not because they were ineligible but because the budget for that year could not accommodate all the needy students. This challenge has severally been raised by HESLB officials and even the government itself [ 19 , 59 , 67 , 72 ]. Acknowledging this challenge, the government has long been making efforts to invigorate this situation by increasing the HESLB budget on annual basis.…”

Student Loans Financing in Tanza:

“…It is against this background that a small-scale study was undertaken on the student loans system in Tanzania (Kossey and Ishengoma, 2017;Nyahende, 2017Nyahende, , 2013Nyirenda, 2016;Ally, 2015), drawing from international experiences of student loans finance (Dary and James, 2019;Salmi, 2003;Chung, 2003;Woodhall, 2002a;Nortey, 2002;Woodhall, 1983), discourses on financial aid schemes for HE students (Woodhall, 2002b;Irina, 2002), and debates surrounding the efficacy of student loans in increasing the supply of HE finance (Ziderman, 2004(Ziderman, , 2002Woodhall, 2003a). The study aimed to answer the following key questions:…”

Determinants of the Penalty Waive by the Defaulters: The Case of Higher Education Loan Board (HESLB) in Tanzania

“…In Africa, the expansion of higher education was emphasized since independence of the African countries. Immediately after independence, stress was put on human resource formation to develop and modernize various economic sectors/various sectors of the economy [6]. Higher education (tertiary education) was viewed as a tool for development -producing a more significant number of graduates to create a critical mass of skills and experts for economic growth and development.…”