Tuesday, April 03, 2007
Philippine Student Loans
When Filipinos think of student loans. Its usually a grant from the government or some private association in which the student repays them after graduating or becomes a full scholarship if the student can maintain his grades at a certain level. But if you think about it, there is no commercial product that is available from banks that particularly caters to students. There are personal loans and multipurpose loans out there that can be treated also as a student loan because those type of loans can be used for any purpose of the borrower. But as a separate product, there is no student loan being offered in mainstream banks that can readily be accessed by the typical Filipino family. And how can a student apply for a personal loan if they cannot provide a proof of income or an Income Tax Return? These documents are necessary when applying for a loan if you ever want to be approved by the bank. Even if you are a working student, most banks will not approve the loan of part timers.
Government should cooperate with banks to provide ready to access student loans with lower interest rates that can be subsidized by the government as well as flexible terms and easy approval for families of OFWs, especially since tuition fees are skyrocketing through the roof. If you think how much our tuition fees when we are studying (for the 30 something crowd out there) compared to today. Parents are hard press to find money to pay for their children's schooling and government must provide a commercial alternative to scholarships and grants because not ever student can maintain a high grade point average or become a valedictorian. I mean how many valedictorians are there in a batch? 1000? 100? There is only one in contrast to how many students also need funding. I don't believe in dole outs by the government and by providing a ready commercial student loan product with a significantly lower interest rather than the alternative to getting a loan from loan sharks which charge as high as 20% a month. Poor families with loan shark debts will sink deeper into poverty because interest rates do add up but they will still bite just to provide money for tuition fees for their children who they will pin all their hopes and dreams but after graduating will join millions more out there looking for a job.