Preamble
A report by the World Bank entitled “Improving Higher Education in Malawi for Competitiveness in the Global Economy” indicate that enrollment in higher education in Malawi is among the lowest in the world. Whilst that is the case, the report further revealed that enrollments in higher education institutions is dominated by students from rich households because they are the ones who easily afford to pay the costs of higher education. Resultantly, there is a wide gap between the rich and the poor in accessing higher education. As one way of bridging this gap the Government of Malawi though an Act of Parliament established the Higher Education Students’ Loans and Grants Board (HESLGB), whose mandate is to provide loans and grants to needy students in all accredited Higher Learning Education institutions in Malawi. HESLGB is also legally mandated to recover all loans that were granted to students under students’ loan schemes since 1985/86 as stated in section 4 (k) of the of the Higher Education Students’ Loans and Grants Act.
Employers are key stakeholders of HESLGB
Loans recovery, as one of the mandate of the Student’s Loans Board is key to raise sufficient funds to meet the rising demand for students’ loans every year and is strategic towards the realization of a viable self-sustaining students’ loans revolving fund. Employers of former students’ loan beneficiaries are crucial to the loan recovery process because they are legally obliged to facilitate tracing of graduate employees and to recover loans on behalf of the Loans Board as stipulated in sections 29 and 30 of the Higher Education Students’ Loans and Grants Act No.2 of 2015.
Obligations of Employers as per the HESLGB Act
According to section 29 of the HESLGB Act; it is the duty of all employers of any former students’ loan beneficiaries to:
- Demand every employee to declare whether they have a student loan (right at the time of being recruited);
- Notifies the Loans Board within thirty (30) days of the employment of a graduate employee who is a former students’ loan beneficiary; in turn, the Loans Board shall provide to the employer the graduate employee’s loan status and balance.
- Ensure that the employee arranges with the employer for the monthly deduction and remittance of repayment installments to the Loans Board in accordance with the HESLGB Act.
- Ensure that monthly deductions are made from the salary of a former loan beneficiary and remitted to the Loans Board within fifteen (15) days after the end of each month. And;
- Inform the Board, in writing, when so required by the Board, of the position, rank, or salary and changes if any, of an employee who is a former students’ loan beneficiary.
Remitting deductions from graduate employees (former students’ loans beneficiaries) to the Loans Board
Section 30, subsection 2 of the HESLGB Act stipulates that an employer shall 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. All the deductions are supposed to be deposited in 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.
Penalties for employers if non-compliant to their prescribed obligations.
According to section 30 of the HESLGB Act, All employers who fail, 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, within a period of thirty (30) days, 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.
The HESLGB Act further states 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 Loans 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.
Nelson Mandela once said that “education is the most powerful weapon you can use to change the world”, HESLGB calls upon all employers to support its efforts towards changing Malawi through provision of loans and grants to needy students by being compliant to their legal obligations in tracing employees who once benefited from the Students’ loan scheme and in proactively engaging in the recovery of the loans from the same.
HESLGB believes that employers’ commitment and support in loan recovery efforts will go a long way in bridging the gap between the poor and the rich in accessing higher education, thereby ensuring equitable and inclusive access to higher education in Malawi.