HR Managers are Key in Recovery of Student Loans

Share

HR Managers are Key in Recovery of Student Loans

Share
by Admin2017

Human resource management is one of the most strategic departments of each company/organization. This department is important because it deals with the process of employing, training, compensating, and developing strategies to retain people. Additionally, the department is involved in development of policies and in so doing it is imperative that human resources managers must be aware of all laws that directly or indirectly affect the workplace.

Considering that the legal environment is always changing, human resource managers must always be aware of changes taking place and then communicate the same to the entire management of the company/organization. This gist of this entry is to provide human resources managers with general information about recovery of student loans and explain their legal duties as stipulated in Higher Education Students’ Loans and Grants Board (HESLGB) Act number 2 of 2015. 

Obligations of Employers

According to section 29 of the HESLGB Act, all employers of any former student loan beneficiaries have the legal duties to:

  • demand every employee to declare whether they have a student loan (right at the time they are being recruited);
  • notify the HESLGB within thirty (30) days of the employment of a graduate employee who is a former students’ loan beneficiary;
  • ensure that the employee arranges with the employer for the monthly deduction and remittance of repayment installments to HESLGB;
  • ensure that monthly deductions are made from the salary of a former loan beneficiary and remitted to HESLGB by every 15th of a month And;
  • Inform HESLGB, in writing, when so required by HESLGB, of the position, rank, or salary and changes if any, of an employee who is a former students’ loan beneficiary.

It is therefore legally binding for human resource managers to periodically submit the list of their graduate employees, indicating the universities or colleges where the graduate employees studied, the years of their studies, if female and married, their maiden names at the time they were in college and their students’ registration numbers (if remembered) to HESLGB.

What the employer should expect from HESLBG

Upon receipt of such information, HESLGB will provide loan balances for those graduate employees found to having accessed students’ loans when they were in college. Such information will be sent to the human resource managers so as to make decisions and arrangements for recovery of the loans from the graduate employees. 

Remittance of monthly deductions

Human resource managers can make a once off payment on behalf of their graduate employees and proceed to make internal deductions at source or employers can arrange with their employees (in case of large portfolio of students’ loans) to be making monthly deductions for a specified and agreed timeframe with HESLGB.

However, human resource managers must abide by section 30 subsection 2 of the HESLGB Act which 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 HESLGB by 15th of each month.

It should be noted that HESLGB Secretariat or HESLGB members of staff do not handle any cash as such all deductions from employees must be deposited into the following bank accounts:

  • FDH Account number: 1380000022625, Account Name: Student Loans Collection Account, held at City Centre Branch or
  • National Bank Account number: 1002261808, Account Name: Higher Education Loans Recovery Account, held at City Centre Branch 

Upon making the deposit, the employer must send proof of the payment to HESLGB through emails: info.loans@heslgb.com or loans.recoveries@heslgb.com for HESLGB to issue a receipt and update the loan status of the employees. 

Penalties for Noncompliant Employers

If any employer fails to comply with the provisions of the HESLGB Act the Board may by order impose a penalty. For instance, if employers fail, without reasonable cause, to notify the HESLGB 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 (K1, 000, 000) for each individual student loan beneficiary in their employment.

The Following are some additional, but not limited to, scenarios that warrant penalties;

  • Where an employer fails to deduct any loan repayment from an employee as instructed by HESLGB;
  • Where an employer deducts any loan repayment from an employee and does not pay such deductions to HESLGB and;
  • Where an employer fails to remit deductions to HESLGB within 15 days after the end of each month.

Call to action

Human resource managers have a crucial role in recovery of student loans. They are there to act as a bridge between their respective companies/organizations and HESLGB.  Therefore, HESLGB calls upon all human resource managers to proactively play their roles in order to ensure that companies/organizations are adhering to provisions in the HESLGB Act.