Preamble
In 2015, the Government of Malawi through an Act of Parliament established the Higher Education Students’ Loans and Grants Board (HESLGB) to facilitate provision of loans to needy and deserving students pursuing higher education in Malawi. The Board is also empowered to recover all outstanding loans given to former University of Malawi (UNIMA) (then comprising of Chancellor College, Kamuzu College of Nursing, Bunda College of Agriculture and the Malawi Polytechnic) and Mzuzu University (MZUNI) students by Government since 1985.
Recovery of the outstanding loans is aimed at creating a revolving fund from which funds can be drawn to support current and future needy Malawian students to purse higher education. The essence of our entry this week is to remind employers of their legal obligations towards the recovery of students’ loans and to provide them with information that would help them not to be in conflict with the law.
HESLGB Act and the Roles of Employers in the recovery of students’ loans
Tracing of graduate employees
According to section 29 and 30 of the HESLGB Act; all employers in Malawi have the obligation to facilitate tracing of graduate employees who benefited from students’ loans scheme.
Recovery of the students’ loans
The HESLGB Act makes it mandatory for employers to facilitate recovery of the loans on behalf of the Loans Board. Employers therefore must be aware of the prescribed penalties in case of their noncompliance to the tracing and recovery roles.
What the Board is doing to reach out to employers
In order to ensure that employers are aware of their obligations, the Board has been directly writing to remind them of their obligations and requesting them to furnish the Board with a list of all their graduate employees from UNIMA and MZUNI.
The next important step upon receipt of such communications employers are required to compile a list of all their graduate employees only (not all employees). The list is expected to include the following details; names and surnames (including maiden name for married females), sex, Years of study, name of College/University which each employee attended, student registration number(if possible), Phone number or Email address currently being used. All these are included in an attached template to the letter the Board send to employers.
Once the Board is furnished with this list which is compared with the list of debtors in the Board’s database; the employers are provided with the loan status of each graduate employee. It should be noted that failure to provide adequate details, as detailed above, to the Board makes it difficult for the Board to quickly and timely revert to the employer with the loan status of their employees.
Employers are therefore required to make arrangements with their employees on the mode of repayment for their loans. There are three options that employers can follow to ensure that their employees repay their loan, these include; (i) employer making once off payment to the Board on behalf of their employees and then make monthly deductions from the salary of their employees, (ii) employers arranging with their employees to be making monthly deductions and then remitting the deductions to the Board on a monthly basis or (iii) seeing to it that employees repay their loans as individuals within a specified time.
Remittance of monthly deductions
Employers who arrange with their employees to be making monthly deductions should note that section 30 subsection 2 of the HESLGB Act stipulates that “all employers should pay, in the prescribed manner, every deduction made from a loan beneficiary’s salary to the Board within fifteen (15) days, after the end of each month”. This means that all employers must remit the monthly deductions to the Board by 15th of each month.
It should further be noted that all employers who fail to deduct, or after having deducted a loan repayment from a loan beneficiary, fail to pay such deduction to the Board within the period of fifteen (15) days after the end of each month, shall be liable to pay a sum equal to ten percent of the total amount of the monthly repayment for each month or part of the month that the repayment remains unpaid.
A Warning and Call to Action
The Board would like to additionally remind all employers that failure, without reasonable cause, to notify the Board that they have in their employment, a student loan beneficiary after being made aware of such a fact, commit an offence and shall, on conviction, be liable to a fine of one million Kwacha (K 1,000,000) for each individual student loan beneficiary in their employment.
HESLGB emphasizes on the important and strategic roles that employers can play in recovering all outstanding loans thereby contributing towards creating a self-sustaining students’ loans revolving fund to meet the increasing demand for student loans. All employers, as per the HESLGB Act must upon recruitment of new personnel enquire about students’ loans status during interviews. All employers are called upon to periodically declare to the Loans Board the recruitment of graduate employees who have students’ loans. Very soon each former graduate who benefited from students’ loans and has completed paying back to the Government through the Loans Board shall be given a completion certificate. Employers therefore must demand from their graduate employees who were students’ loans beneficiaries to show these certificates as proof of completion of payment.
It is therefore, only right and just for all employers to support the vision of the Malawi Government of increasing access to higher education by fulfilling their obligations towards loan recovery by tracing former loans beneficiaries in their employment and by commencing recoveries of the loans. Begin now and join the huge list of employers who have already complied with their obligations in the students’ loans recoveries process. Begin now and avoid unnecessary sanctions that can dent your organizational corporate image.