Loans Crush Graduates and Leave Millions in Debt

KAMPALA, UGANDA — Alfred Ssekito feels grateful for the government loan that enabled him to become the first member of his family to graduate with a university diploma.

The trouble is, the 25-year-old has no way to repay it.

He had a one-year grace period after graduating in 2018 with a bachelor’s degree in education from Kampala International University. And he was scheduled to pay back 130,000 Ugandan shillings ($37) every month, repaying his 7 million shilling ($1,968) student loan by 2024. But after failing to land a job as a secondary school teacher, he earns a monthly income of 600,000 shillings ($169) by selling tomatoes — and has only made one loan payment so far.

“I have to deprive myself of some basic needs to be able to pay back this loan,” Ssekito says, adding that he has to help support three younger siblings. “It’s very challenging for me.”

Uganda’s student loan program dates back to 2014, when Parliament established the Higher Education Students Financing Board to make higher education more accessible for low-income youth. As of October 2021, around 11,000 students could borrow funds at a 7% interest rate to attend 11 public universities, 11 private universities and 36 training programs. But of some 3,000 who have completed their studies, only 30% are on track to repay their loans, says Bob Ambrose Nuwagira, the board’s spokesperson. The amount of money officials need to recover exceeds 32 billion shillings ($9 million), jeopardizing the entire program.

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Governments around the world are grappling with ballooning student loan debt, as the share of college-aged people enrolling in vocational colleges and universities has doubled from 20% to 40% in the past 20 years, according to data from the United Nations cultural organization, known as UNESCO. In the United States alone, outstanding federal student loan debt has tripled since 2007, reaching $1.6 trillion in 2020.

In Uganda, Ssekito wants to renegotiate his repayment terms, which Nuwagira confirms can be arranged on a case-by-case basis, especially for graduates in fields where the pandemic has severely limited employment prospects. The government’s position is that any graduates struggling to repay their loans should notify the financing board, he says, rather than letting the debts accumulate indefinitely.

But in light of the sheer number of outstanding loans, the board has launched more coercive efforts to solicit repayments. These include contacting employers to remit 30% of loan recipients’ salaries — and denying them passports and other government documents.

“What they pay back pays another cohort in the subsequent year,” Nuwagira says. “If they don’t pay, there will be no sustainability.”

Critics say the government should accept more responsibility for setting thousands of young adults up for failure. Two of Uganda’s neighbors offer more lenient models: Kenya’s government subsidizes interest rates for its student loans; Tanzania has eliminated penalties for overdue loans.

Deborah Kirabo, a programs officer at Uganda Youth Network, a nonprofit economic empowerment organization, says the student loan plan was bound to face challenges given the country’s high youth unemployment rate, cited at 13% in October by retired Col. Okello Charles Engola Macwodogo, Uganda’s minister of State for Labour, Employment and Industrial Relations.

Even after earning diplomas or certificates beyond high school levels, the majority of Uganda’s young adults end up working in the informal sector, Kirabo says, including domestic and agricultural work. For those who obtain positions requiring college degrees, incomes tend to be low during the early years of employment.

“How are they going to recover the money?” Kirabo says. “Even people who have done science subjects take time to get jobs. How can someone pay back when they can’t feed themselves or meet their personal needs?”

Under the current loan process, applicants submit forms and are interviewed based on their academic qualifications, proposed courses of study, and ability to afford tuition without assistance. Those who are determined to have low incomes and high academic potential are enrolled, with tuition fees covered by the loan. They still need to pay for their own housing, food and any other needs.

Apophia Agiresaasi, GPJ Uganda

Edna Mubeezi, a nurse at CoRSU Rehabilitation Hospital in Entebbe, a city in central Uganda, repaid her student loan within two years. Other recipients have struggled to do so.

Not everyone is unhappy with the terms. Edna Mubeezi credits her government loan for supporting her nursing studies at Mulago School of Nursing and Midwifery. After graduating in 2017, she succeeded in repaying her 5 million shilling ($1,400) debt within two years, through her monthly salary as a registered nurse at CoRSU Rehabilitation Hospital in Entebbe, a city in central Uganda.

“I kept paying in installments every month,” she says. “At one point, I sold off my cow at 2 million and paid the remaining money.”

Mubeezi says the financing board should be sympathetic to those who don’t have the means to pay. But she believes the board should consider stricter consequences to recover the funds for those who have jobs and have not been repaying their loans or formally requested adjusted repayment terms. She wants the next generation to benefit from the program.

But Ssekito says if the government forces him to make his loan payments right now, he won’t be able to cover his basic needs, such as food and clothing.

He still hopes to find a job as a teacher now that schools have reopened. They were closed since March 2020 due to the pandemic. The student loan plan should continue, he says, but with much stronger guidance for applicants.

“Those planning to get a loan should start planning earlier on how to pay, such as starting a small business so it grows as you study,” he says, “not just wait on getting a job.”