Graduates celebrating at LDC.

Gov’t to Allocate UGX 14 Billion for Student Loans in Supplementary Budget

By The Insight Post-Uganda

In a development that promises relief to countless aspiring students seeking financial support from the Higher Education Students’ Financing Board-HESFB, the Ministry of Finance and Economic Development has announced its plan to allocate 13.958 Billion Shillings for student loans through a supplementary budget.

The Higher Education Students’ Financing Board has had financial constraints due to budget cuts in the 2022-2023 Financial Year, coupled with reduced appropriations in the current fiscal year.

Consequently, there was a significant shortfall in the funding necessary to support new loan applicants, not to mention the mounting arrears burden from continuing students.

With the passing of the budget, the board found itself without the necessary funds to cater to new loan seekers and to address the outstanding arrears of continuing students.

This predicament triggered an outcry from those reliant on these funds, potential loan applicants, and universities awaiting government disbursements.

However, there now appears to be a glimmer of hope on the horizon, as the government has recognized this issue as a top priority in their supplementary budget allocation.

Speaking before the parliament, the Finance Minister, Matia Kasaija, confirmed the government’s commitment to introducing a supplementary budget to rectify this pressing concern.

Initially, Kasaija had proposed that the supplementary budget be presented and processed in parliament. However, the Speaker in chair, Thomas Tayebwa, advised him to utilize the window where the government can make supplementary budget allocations, spending, and subsequent notification to parliament before December. 

Section 25(1) of the Public Finance Management Act 2015, provides that the Minister of Finance may approve a supplementary budget up to 3 percent of the appropriated budget but is required to seek retrospective approval from Parliament within 4 months. 

Following this advice, Kasaija agreed to this approach and assured that the government would release the necessary funds in the near future.

This allocation will enable the Higher Education Students’ Financing Board to provide loans to new learners and clear their outstanding arrears, ensuring that students can continue pursuing their academic aspirations without financial hindrances.

Available records indicate that since its establishment, the board has received a total of 123.076 billion and has provided support to 28,115 students.

In the Financial year 2022/2023, a budget allocation of 29.520 Billion Shillings was earmarked to assist 3,764 students. However, due to revenue shortfalls, only 23.100 Billion Shillings were released.

Looking ahead to the 2023/2024 budget, the board required a sum of 44.9 Billion Shillings to meet its obligations. Due to constraints in available resources during the preparation of the 2023/2024 budget, only 31.007 billion shillings have been allocated to the board, resulting in a deficit of 13.958 Billion Shillings.

This shortfall encompasses funding for both new students, numbering 1,500, totaling 6.75 Billion Shillings, and domestic arrears amounting to 7.208 Billion Shillings.

In recent years, Uganda has witnessed a concerning increase in the dropout rate among students at institutions of higher learning. This alarming trend is primarily linked to the escalating university tuition fees, though various other factors also play a role.

A study conducted by the 2016 Africa Higher Education Student Survey Project revealed a disheartening statistic: nearly 30 percent of students who enroll in various degree programs in Uganda end up discontinuing their education.

Further insights from a survey conducted by Professor Jessica N. Aguti of Makerere University highlight the root causes of this pervasive issue.

Approximately 83.7 percent of the students who prematurely abandon their educational pursuits can be directly attributed to their disadvantaged family backgrounds. These students hail from low-income households, and the financial burden of pursuing higher education becomes insurmountable for them.

It’s not only the students who drop out that are affected by these financial constraints. A substantial number of potential candidates opt not to even apply to universities, recognizing that they lack the necessary financial resources to support their educational ambitions.

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