Editorial | PAAC falls short on Students’ Loan Bureau

Last week’s discussion at Parliament’s Public Administration and Appropriations Committee (PAAC) of the deepening crisis of payments arrears at the Students’ Loans Bureau (SLB) was disappointingly, but predictably, sterile.
At present, according to the SLB’s executive director, Nickeisha Walsh, the delinquency is 48.2 per cent, a jump of 6.81 percentage points, or nearly sixteen and a half per cent, over two years. 
At this rate of delinquency, an average increase in arrears of over eight per cent a year, what was designed to be a revolving fund will soon go broke unless the Government digs its fingers deeper into taxpayers’ pockets to shore up the scheme.
At the PAAC, the discussion of the problem turned on two main themes. The SLB’s management whinged about the reluctance of borrowers to meet their debt obligations – some of which is, no doubt, true.   On the other hand, members of the political opposition suggested that the SLB wasn’t doing enough to restructure the payment arrangements of debtors who fall on hard times or are otherwise not in a position to pay.  Or, they accused the SLB of a strategic error in failing to freeze interest arrears while pressing hard to collect principals. This would help to clean up the books and provide the SLB a pathway to a new start.
There is, perhaps, some merit in these claims. So neither set of arguments is dismissed. They should be considered for their value.
But what was absent from the PAAC debate were ideas and mechanisms for the fundamental reform and reset not only of the SLB but the financing of tertiary education in Jamaica, which is not asking for a reinvention of the wheel.
INCOME-CONTINGENT LOANS
Indeed, this newspaper – and others – have long proposed that the Jamaican authorities consider the introduction of income-contingent loans for education. We have suggested several times that the SLB pilot such a scheme.
The Gleaner’s Editorial Board has also backed the concept of using education loans to create a new asset class for investors in Jamaica.  Three years ago, the actuary Ravi Rambarran said that upwards of J$50 billion would be readily available from Jamaican pension funds to invest in this long-term asset.
A 55-year-old government agency, the SLB is Jamaica’s largest provider of loans for tertiary education, accounting, the agency reported last year, for nearly 40 per cent of the market.   
In 2025, it had more than 35,000 loans on its books, of which approximately 42 per cent (nearly 15,000) were in the moratorium period: the borrowers had either not yet completed their education or were still in the post-study grace period before beginning repayment.
But even those figures are deceptive. At the time of those statistics, a year ago, of the approximately 20,500 loans that were beyond their moratorium period, nearly six in 10 (57 per cent or 11,634) were delinquent. Just under 8,900 (43 per cent)  were current.  These figures have since risen.
At the start of the previous fiscal year, ending  March 31, the SLB projected to disburse J$8.8 billion to borrowers, an increase of 14 per cent on 2024-25.  But according to government budget documents for the current fiscal year, disbursements reached J$7.63 billion, a 13 per cent shortfall on projections.
For 2026-27, estimated disbursements, at J$5.188 billion, will fall a further J$2.44 billion, or 32 per cent, against the actual for 2025-26.
Additionally, according to the same documents, the SLB has provisioned J$1.032 billion for credit losses, a decline from J$1.15 billion and J$1.5 billion in 2025-26 and 2024-25, respectively.
DEBT RESET
It was against this backdrop, but in direct response to  Hurricane Melissa, which devastated Jamaica last October, that Prime Minister Andrew Holness launched his ‘debt reset’ initiative for SLB borrowers.
Debtors received a 50 per cent write-off of interest arrears, plus a waiver of late fees and insurance charges. There was also a two per cent discount on interest rates for those who remained in good standing for a year. Additionally, borrowers in good standing were credited J$100,000, essentially a write-down of their debt by that amount.  
The Government’s budget documents indicated that the ‘reset’ cost J$2.58 billion in the previous fiscal year. It is billed at  J$125 million in 2026-27.
The Gleaner appreciated those initiatives but argued that they wouldn’t address the fundamental question of financing and affordability of tertiary education, which partly explains why fewer than three in 10 (27 per cent) of Jamaicans receive any form of tertiary education.
Income-contingent loans are one potential answer. Capping student-debt repayment at an affordable proportion and having debt follow the borrower from job to job, similar to statutory deductions – as happens in several jurisdictions - is worth discussing. Not only is repayment affordable, but the borrower can’t escape or outrun the debt.
Additionally, Jamaica’s $850 billion pension fund industry has billions of dollars of long-term money seeking assets in which to invest. Indeed, education is a long-term, appreciating asset that long-term investors are likely to consider if the appropriate regime is in place.
These are among the issues for which the PAAC should convene another session to explore.