Despite the controversy raised by the decision to deduct the debts due to the Student Loan Fund from the salaries of the employees in the public sector and their sponsors, the Fund has further announced another new measure that will affect the rest of the borrowers who work in the private sector.

Asma Marzouq – Palestine Economy Portal

Translated by: Tamara Barakat

The General Manager of the Student Loan Fund, Murad Ebeid, said that the second step to be taken, after the deduction of monthly amounts of money from the salaries of the public sector employees to repay their loans or the loans of their sponsors, is to demand the borrowers working in the private sector to repay their loans as well. According to the Fund’s data, the number of borrowers working in the private sector is 50 thousand people.

In an interview with the Palestine Economy Portal, Ebeid explained that there are available lists of the names of these employees who work in 1100 private sector institutions in the West Bank and the Gaza Strip. Written notices will be sent to each employee in their workplace, starting from the beginning of next year, demanding that they settle their loans with the Fund in a period that does not exceed over 60 days.

Threats of Decreasing the Credit Rating

Ebeid declared that if the employees do not repay their loans, a harsh measure, agreed and signed upon in cooperation with the Palestine Monetary Authority, will be applied on them. This measure involves downgrading the credit rating for these defaulting debtors to the unified credit system adopted by the Palestine Monetary Authority.

The significance of the credit rating lies in the fact that it determines the eligibility of a person to borrow a loan or make any banking transaction, such as the issuance of a new checkbook. Downgrading the rating will hinder the ability of the defaulters to make many transactions in all Palestinian banks that report to the Palestine Monetary Authority.

Read more: Student Loan Fund: “Deductions from Employee Salaries are 100% Legal.”

Moreover, Ebeid called on all defaulters to go to the Fund and settle their loans immediately. The Fund is working on scheduling the loans in a way that does not place a burden on the budget of the borrowers, and on a basis of income brackets, so that the monthly deductions would not exceed over 6% of their salaries.

The Fund expects the amount of the monthly repayments, resulting from the implementation of the plan to collect the loans due onto private and public sector employees, to reach half a million JD during the first half of 2016, and a million JD per month in the second half of the year.  

Exemptions for the Deceased and Postponements for the Unemployed

According to the Palestinian Cabinet’s decision regarding the collection of debts owed to the Fund, martyrs and those deceased due to car accidents or chronic illnesses will be exempt from repaying the loans, as long as their sponsor presents papers that prove the matter.

As for the unemployed, once they present papers that prove their state unemployment, the repayment of their loans will be postponed for a renewable period of six months.

The Fund’s data reveals that the overall number of borrowers is 150 students and that the average debt on each student is 500 JD.

Why did the Fund delay demanding the repayment of the loans?

Ebeid admits that there was a problem in the follow-up process with the borrowers, but he affirms that since 2010, the Fund has started publishing advertisements in the three local newspapers and installing billboards on main roads and at the entrances of cities, demanding the borrowers to repay their loans. However, there was no response to these efforts.

He also said that the funding sources from the Student Loan Fund are scant due to the decrease in funding to the Palestinian Government in general. The donors to this Fund are demanding the repayment of the loans so that the Fund would be able to carry on achieving its main goal of circulating money among students.

The Fund is supposed to receive 10 million JD a year to be able to operate normally. However, it has only received 3 million JD over the past three years.

Since its establishment, the Fund has primarily relied on Saudi and Kuwaiti funding sources, which have provided it with 200 million JD, 50 million of which were grants given to students, while the rest were loans to be repaid.