Starting from January 2016, the Ministry of Finance (MOF) will deduct amounts of money from the salaries of the public sector employees who borrowed money from the Student Loan Fund and from their sponsors. The deducted money will be added to the Student Loan Fund. This decision created a lot of controversy, so how legal is it?

Asma Marzouq – Palestine Economy Portal

Translated by: Tamara Barakat

The General Manager of the Student Loan Fund, Murad Ebeid, said that deductions made by the MOF from the salaries of the public sector employees to be added to the Fund are one hundred percent legal. The Fund possess bills of exchange carrying the signature of the borrowers and their sponsors that oblige them to pay their due loans. The borrowers can confirm these bills of exchange in person, by visiting the headquarters of the Fund.

Thousands of public sector employees were surprised to find notices on their salary vouchers notifying them to report to the Student Loan Fund to settle the student debts due on them or their sponsors. These loans will be deducted from their salaries from the beginning of January 2016. The deductions will not exceed over 5% of the salary, and will not be less than 100 shekels.

Legal experts expressed their concerns about the legality of the deductions since they were not decided on through the court, and especially since some loans have been made over ten years ago, a period after which debts expire, according to the statute of limitations on debts in the Law of Commerce.

Ebeid, however, told the Palestine Economy Portal that the deductions will be made on the basis that the Fund’s money is considered public money, and so the due debts do not become prescribed.  The Government has the right to take the necessary measures to retain the loaned money.

The Fund’s money was deemed public money based on a law issued by President Mahmoud Abbas in 2013.

Article 24 in this law stipulates that money borrowed by students from the Fund and not returned shall be treated as public money and collected according to the valid legislations regarding public money.

Moreover, Article 26 states that any rescheduling of the granted loans before the Law becomes valid will be upon a decision made by the Palestinian Cabinet. And this is what actually happened as a decision was reached in the Cabinet meeting on 15/09/2015.

Advocate Ibrahim Sbeihat believes that the decision to make the deductions seems very legal since it was decreed by the President and recommended by the Cabinet.  The Domanial Money Collection law, implemented since 1952 in Palestine, authorizes the Government to withhold a third of the employee’s salary and empowers it to attach and sell properties in order to cover the public money debts.

Sbeihat also said that this does not prevent the employees from challenging the decision by filing lawsuits before the courts because many of the students who signed the contracts were not aware that the money they were given was considered a loan or a grant.

The Student Loan Fund, established in 2001, provided around 200 million JD to students in Palestinian universities over the past fourteen years, 50 million of which were given as non-repayable grants and 150 million as loans that students are obliged to repay to ensure the sustainability and the ability of the Fund to lend to new students.