Student loan scheme given to Rwanda Development Bank

Student loan scheme given to Rwanda Development Bank

Rwanda  Development  bank-BRD is set to    manage the  implementation of the University  Loan Scheme( Students  loans)  after  government  gave a positive  nod   for the transfer of the struggling scheme.

This  comes after the  Cabinet  recently  approved  the  students fundingmechanisms that   paves way for the implementation  of  the scheme   under  to  the country’s development bank –BRD  from Rwanda Education Board

The scheme that provides loans to students in higher learning institutions both in the country and abroad had faced a challenge of   loan recovery, something that called for revision of the disbursement mechanism.

For  example according to   Ministry of education  Statistics,  of  about  Rwf80 billion  that had been disbursed under the  old scheme  only  10 percent  had been  recovered.

Accordingly, the  scheme   will starting disbursing  loans  in September this year and  will be  at an  annual interest  rate of   11 percent  and  payable  a year after  employment   and the   beneficiaries as  previous   scheme will be from  social stratification(Ubudehe) of  one to  four.

The   government will  according to  Prof. Silas Lwakabamba, Minister  for  Education  pumped in  Rwf40 billion in the next   ten years while the scheme  becomes  sustainable  to  provide  financing  on its  own.

The scheme according to the    feasibility study done in 2013 was found   vital in spurring higher learning   education that is needed to increased personnel that is needed in the labor market.

Minister Rwakabamba  notes that   the scheme will target  31,796  beneficiaries   both  continuing and   fresh  entrants  in  higher learning institutions while the  scheme is  expected to   benefit    over 143,000 students  in  10 years.

Under the  new arrangement, the beneficiaries will sign  contracts with the  bank of which   it will  also ensure recovery and well as close follow up of the borrower  while also  a borrower will  be asked to  provide a guarantor  to  help the bank  in recovery  process.

To facilitate the recovery  of the previous loans, the Development  will also  under  a new  law that   is yet to be passed by parliaments   take  over loans  under the  previous  scheme to bring down  the scheme’s bad loans.

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