MOE taken to task for unpaid student loans
THE Education Ministry's long delay in completing a review to make sure student loans are repaid promptly drew scrutiny from the Auditor-General's Office (AGO) in its annual report out yesterday.
Loans that are yet to be recovered from former National University of Singapore (NUS) and Nanyang Technological University (NTU) students amounted to $228.04 million as of last June.
This is part of more than half a billion dollars in tuition fee loans and study loans given to students of institutes of higher learning that are outstanding, the AGO said.
The public-sector watchdog highlighted these sums in questioning the Ministry of Education (MOE) over its drawn-out review of a formula concerning these loans.
AGO had flagged in 2009 that the current formula does not incentivise the banks to put in their best efforts to recover outstanding loans, as fees due to the banks is a percentage of outstanding loan balances.
Any recovery or write-offs of outstanding loans would reduce the outstanding balance, and thus the amount of agency fees payable to the banks.
MOE said then it would review the formula, and gave target dates for completing the review each time the AGO followed up since 2010.
But these dates have been postponed "several times", noted the AGO.
"As at March 2016, the review had not been completed."
The universities rely on outsourced agents to monitor and recover the loans.
But the AGO found numerous instances where loan-recovery and follow-up actions on default cases were not taken in a timely way. MOE also did not follow-up promptly on long outstanding loans highlighted by outsourced agents.
As of June 30 last year, the outstanding balance of tuition fee and study loans to students in institutes of higher learning totalled $511.49 million.
"Such control weaknesses would adversely affect the recoverability of the loans and increase the risk of loss of public funds," the AGO said.
MOE also did not maintain adequate oversight of NUS and NTU on the monitoring and enforcement of scholarship bonds for a scholarship scheme that disbursed $36.52 million in financial year 2014/15, the report added.
Responding to the report, MOE said in a statement that the majority of students in tertiary institutions who take loans are Singaporean citizens.
It is working closely with the universities and banks to ensure prompt follow-up of loans in arrears, among other steps.
MOE acknowledged that the review of agency fees has taken longer than desirable and is "expediting the review".