Fewer approvals for student revolving loans

The number of loans granted by the Student Revolving Loan Fund (SRLF) continues to decline.

In fact, only $4.5 million in loans were approved last year compared to $7 million in the previous year, according to the SRLF 2020/2021 financial report for the period ending March 31, 2021.

The latest figure also pales in comparison to the $11 million approved in 2019, $9.2 million in 2018 and the $12.9 million in 2017.

In his report, the administrative manager of the SRLF Ambrose Johnson did not give a reason for the decline but said it was hoped a quicker turnaround time for loan approvals would help reverse the trend.

“The SRLF has worked hard during the year to press the loan approvals timeframe from an average of four to six weeks to two weeks, and will continue during the coming financial year to implement strategies to achieve its targeted approval time of eight business days,” he said.

“A quicker approval time should also assist in efforts to increase loan approvals and halt the declining number of loans being approved in recent years. The SRLF will continue to innovate and add new loan offerings to its traditional student loan portfolio,” added Johnson.

He gave the assurance that an increase in loan approvals and a faster turnover time would be achieved without compromising the quality of loans being approved.

During the year under review, the SRLF introduced the Digital Transformation Loan (DTL), targeting teachers and educators, and the TopUp Loan, which focused on existing borrowers who may want to further their studies or retool.

Johnson said that while the SRLF has made tremendous strides in managing its delinquency in recent years, a lot of work still had to be done to reach the goal of a delinquency rate below 10 per cent.

For the past three years, that rate has stabilised at around 17 per cent from a high of 21 per cent, and the SRLF said the recent economic climate has hampered the efforts of the collections and legal unit to push the rate down even further.

“With economic activity expected to gain momentum during the financial year 2021/2022, the SRLF will renew its efforts to further reduce overall delinquency,” said Johnson.

The SRLF said it offered an ease to customers who were experiencing financial hardship during the reporting period. These included deferral of payments, suspension of interest, suspension of late payment fees for all borrowers, and reduced payment amounts.

Those arrangements, which benefited hundreds of borrowers, were extended for the entire financial year April 1, 2020 to March 31, 2021, and were further extended, which Johnson said was “appropriate in the circumstances”.

He said the SRLF has been able to strengthen its technological infrastructure, which allowed its employees to transition to remote work with few challenges during the height of the COVID-19 pandemic.

“At the same time, the improved infrastructure provided easier access to its services for its customers. Improvements are continuously being made to the SRLF’s operational capabilities, especially its customer service delivery,” he said while indicating that investment in training was one of the main ways of improving service delivery.

“Part of our strategy to improve our service delivery is to reduce our response time to customers with respect to loan approvals, disbursements and general feedback.”

The SRLF indicated that for the year ending March 31, 2021, it experienced a decline in most of its key financial variables.

It recorded a net profit of $5.6 million, which was $1 million or 15 per cent lower than the previous year. The SRLF noted that the reduction could be traced to a reduction in interest income on student loans.

Total income declined by $3 million, or 33 per cent, to reach just over $6.05 million.

And while the Fund noted that the COVID-19 pandemic had increased its credit risks, it did not anticipate requiring Government intervention.

Johnson indicated that in order to assist the SRLF with being sustainable, its management committee engaged the services of a consultant to review the Fund’s operations “with the view of repositioning the entity for future growth”.

He noted that several recommendations were put forward, including the need for drafting a five-year strategic plan.

“If the recommendations along with the strategic plan are implemented, the SRLF will be transformed into a more customer-centric, agile, and innovative entity,” said Johnson.

He said after reviewing its enabling legislation, the SRLF has also made recommendations for changes to its Act and regulations that would allow it to achieve its strategic objectives.

“During the financial year 2022/2023, the SRLF will be celebrating 45 years of serving the people of Barbados. The time is therefore appropriate to make necessary changes to position the SRLF to serve Barbadians for another 45 years or more,” said Johnson. marlonmadden@barbadostoday.bb