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Too many approvals and weak collections mean no more student loan program

Members of the ASG scholarship board appeared before the House Education & Scholarship Committee in a file photo from earlier this week. [SN file photo]
Proposed policy calls for payroll deduction from former students working for ASG

Tualauta faipule, Rep. Samuel Ioka Ale Meleisea strongly advises the ASG Scholarship Board to establish a new policy so they can collect monies owed to the government under the ASG student loan program.

During a hearing called by the House Education & Scholarship Committee with members of the ASG Scholarship Board this week, Meleisea voiced his disappointment with the issue of student loans, saying it is the carelessness of others that has affected students who are seeking financial assistance from the student loan program to pay for schooling off-island.

Meleisea said when he heard that the board had put a stop to the student loan program, he wanted to find out why, as there are a lot of families who need the program to pay for their childrens' education because they can't afford to pay for it outright.

 He said he was saddened to learn that the reason why the student loan program was put on hold was because there was no money to fund the program.

According to Meleisea, information he received from the Development Bank president is that since 1997, ASG has spent over $10 million on the student loan program, but to date, most students have been unable to pay back their loans and because of that, there was little left in the account to fund other student loan applications, which resulted in the board putting a stop to the program.

Meleisea wanted to know if the board has any authority to set up a new policy to ensure that all students who owe money to the program are told to find ways to make their payment, especially those who are working for the government.

He said such a policy would give the ASG Treasurer the authority to deduct payments directly from those students' pay checks to clear what they owe to the government under the student loan program.

ASG Scholarship Board chairman, Sen. Faiivae Iuli Godinet told the committee that after the new board was confirmed, they found out that almost $11 million was spent by the government to fund the student loan program through DBAS.

What happened was, a lot of student loan applications were approved but repayment was very weak, and there was not enough revenues to generate new student loans, which caused the board to make the decision to hold off on issuing any more student loans until the problem is solved.

Faiivae told the committee that some students use the loans to pay for school, but after they graduate, they plan to remain in the US and find good paying jobs while others are retuning home but are keeping a low key profile, trying to hide so they won't have to make any payments on what they owe to the government.

He said the new board is trying to monitor those returning students, in an effort to get them to start paying. "We want to help new students who are asking for student loans, but we have to do something to make sure payments will come in," in order to increase the value of the account.

He echoed Meleisea's suggestion about directly cutting payments from former students who are now working for ASG, saying the board is working on setting it up.

Faiivae emphasized that this is their first year as board members "but this problem has been there for almost 10 years now."

He said the board doesn't have the authority to carry out payroll deductions from the former students, but they will work with the treasurer on ways to solve the problem.

"I think there was a lack of a collections policy by the previous board, but we will make sure this board will do something to avoid the issue from growing,” Faiivae said.

“It's really sad to think about it, because there are a lot of students who are applying for student loans to pay for school, because they are not eligible for the scholarship program, but the program is now on hold. I think we need to have more awareness programs - on television or also on the radio. It’s not about trying to embarrass anyone, but trying to inform them that they have a duty that needs to be fulfilled, and that is, paying back their loans to the government,” Meleisea said.

He also recommended that the names of those who refuse to make payments be printed in the newspaper, similar to what a local lending company is doing, "so maybe when they see their names, they will start making payments."

Saole faipule, Rep. Kitara Vaiau echoed Meleisea’s concerns and said those who don't want to pay back their loans have forgotten the love the government showed them, in supporting their education, because now it's time to pay it back, they are hiding, pretending like nothing's happening.

“If the government showed those students love and gave them the opportunity to continue on with school, by approving their student loan applications, these new students who are asking for a loan deserve to have their applications approved,” Vaiau said.