Analysis of the factors influencing student loan recoveries; a case study of the higher education students financing board (HESFB) of Uganda

Abstract

The purpose of the study was to analyse the factors influencing the recovery of student loans using the Higher Education Students Financing Board (HESFB) of Uganda as main case study. This involved assessing and reviewing the entire loan process at the HESFB from application to recovery in order to identify the internal systematic factors and the external factors which influence loan recoveries. The objectives of this study were; to assess the effectiveness of the loan application, appraisal and allocation process at the HESFB; to evaluate the effectiveness of the loan recovery process at the HESFB and to identify the challenges that beneficiaries face in the repayment of their student loans. The study adopted a cross sectional survey methodology to achieve the set objectives. The data was collected from HESFB staff in Kampala and from accessible beneficiaries whose loans had matured for repayment. Using a structured questionnaire approach, and documentary check review data on the variables of interest was collected from 69 respondents. The researcher made use of primary and secondary methods of data collection which included questionnaires and documentary check review. Data collected was analysed using descriptive statistics such as frequencies, mean and standard deviation; using the Statistical Package for Social Sciences (SPSS) software. The study noted that to a larger extent, internal systematic weaknesses such as inadequate use of the Loan Information management system (ILMIS), under staffing at the HESFB, inadequate contact with formal employers and financial system players led to inadequate follow up of loan beneficiaries. The findings also noted that although most student beneficiaries were aware of their obligation and were willing to repay the student loan, many stated not having a steady job as their main hindrance to repayment of their student loans. Based on these findings, the study recommended that the HESFB fully adopts the use of the ILMIS so as to be able to accurately amortize the loans due, the HESFB enters into formal agreements with employers to help in the tracking of student beneficiaries and also increase on the number of recovery staff so as to improve the capacity of the HESFB.