The sustainability of the Student Loan Scheme in Ghana has been the downside of its operations since it was first introduced in 1971. The one major determinant of a successfully scheme is its ability to recover loans disbursed. In recent times, numerous government initiatives have resulted in the decline of government support to the scheme managers of the Students Loan Trust Fund (SLTF). This has called for appropriate strategizing of recovery activities by the scheme Managers in order to remain sustainable and relevant.
The study depended on both primary and secondary data to examine its objectives. The key objective of the study is to examine what influences the repayment behaviour among students’ loan borrowers, using data from SLTF comprising of borrowers whose loans are due from 2008 to 2018. Primary data was also collected via telephone interview to try to establish the relationship between the knowledge of loan agreement and loan repayment.
The study used SPSS to present a descriptive analysis to examine the influence of gender, programme of study and knowledge of loan agreement, in addition to other secondary independent variables such as parental employment status and educational level, also the respondents and employment status.
The study’s findings suggests that more males enrol in tertiary institutions than females, and as a result the analysis proved that more males made repayment than females. The study further finds that the higher the occupational level of borrowers after graduation the higher the rate of repayment. Borrowers were found to have knowledge about the loan agreement however, it was continued reminders that influence repayment behaviours. The study suggests that fund managers together with policy makers must strategize their reminders to borrowers in order to eliminate the lag in repayment and ensure sustainability.
CHAPTER ONE INTRODUCTION
- Background of Study
Economies around the world are driven by innovations developed and implemented by their skilled labour force. To achieve this skilled workforce requires that higher education institutions produce graduates with requisite job-relevant skills. Higher Education is seen nearly everywhere as a bane of economic growth, and a policy instrument for the development of individual economic mobility and social justice. (Johnstone, 2005) A nation stands to benefit from education greatly when its citizen attains higher education; in ways such as innovation and entrepreneurship.
The prospect of having critical thinkers, who can solve problems, is a goal for many economies. According to Hanushek and Wößmann (2007), attaining higher education has three mechanisms; it increases the human capital, it increases the innovative capacity and added knowledge required to understand and process new information and to accurately build new technologies.
In a 2008 UNESCO report, it was revealed that enrolment growth has outpaced financing capabilities where in Africa even though the support for the education sector has been around 20% of its public expenditure for the past 15years, the enrolment numbers have tripled by an annual average rate of 16% in the same period. People are appreciating the need for education and they do not have to worry about borrowing against future income due to greater returns on higher education. Lochner and Monge-Naranjo (2014) have also identified that the increasing cost of and returns to attaining a college education, have led to sizeable increases in the demand for a student loan, in many countries such as Kenya, Uganda,
Tanzania and Ghana. For as long as there is demand for the students’ loan, the government will support the schemes, however, the repayment must be heightened to increase the supply.
Higher education began in Ghana in 1948 with the opening of University of Ghana, (previously called University College of the Gold Coast). To make it attractive and encourage enrolment it was made free for students with other incentives such as snacks to stay in school. As enrolment grew and the interest and benefits for higher education soared, the freebies were reduced and eventually stopped.
Governments have limited resources to meet a number of social needs, such as healthcare and housing along with education (Isamil, Serguieva and Singh, 2010). This situation is what led to the Ghana Government introducing the cost-sharing model in the public higher education sector, where students were made to pay for part of the cost of their education. Because of the benefit of an educated workforce to economies, many of the Students Loan Schemes in the world is government supported and were introduced to assist students to enrol in Higher Education (Hira, Anderson and Peterson, 2000). Most countries including Ghana have come to realize that they cannot rely solely on government budget as the source of tertiary students financing, and this has led to the need to make these schemes self- sufficient.