The Ministry of Education and Sports has begun tracing employers of former students who have defaulted on government student loans as part of a renewed effort to recover billions of shillings owed under Uganda’s Higher Education Students’ Financing Scheme. The move targets graduates who have completed their studies, secured employment, but have deliberately failed to repay their loans or communicate with the ministry about their financial circumstances.
Dr Michael Wanyama, the Head of the Students’ Financing Secretariat, said the ministry is compiling information on defaulting beneficiaries and notifying their employers before instituting legal action against persistent defaulters.
The recovery drive follows a legal notice issued by the ministry last week giving beneficiaries whose loans have matured six months to either begin repayment or formally engage the ministry regarding their financial circumstances. However, the notice sparked concern among some former beneficiaries who interpreted it to mean that every recipient of a government student loan had been ordered to clear their debt within six months.
Wanyama dismissed the interpretation as a misunderstanding, clarifying that the ministry is not targeting graduates who are unemployed or genuinely unable to repay. Instead, he said such beneficiaries should notify the ministry so their repayment schedules can be adjusted according to their financial situation.
Under Section 23(5) of the Higher Education Students Financing Act, as amended in 2024, beneficiaries without income must notify the ministry within 14 days of receiving a repayment notice. They are also required to provide updates on their employment status every three months and negotiate flexible repayment arrangements while ensuring the loan is repaid within the prescribed period.
According to Wanyama, one of the ministry’s biggest challenges is that many former beneficiaries have disappeared without informing officials whether they are employed, unemployed or working outside Uganda, making loan recovery increasingly difficult. The government’s concern stems from the scheme’s persistently low recovery rate despite more than a decade of lending.
The Higher Education Students’ Financing Scheme was established in the 2014/15 financial year to expand access to university and diploma education for academically qualified students from financially disadvantaged backgrounds. Last year, the scheme ceased operating as an autonomous agency and was integrated into the Ministry of Education and Sports.
Available data shows that since its inception, the scheme has supported 18,501 students, including 15,427 pursuing degree programmes and 3,074 enrolled in diploma courses. Of these, 11,709 have completed their studies and entered the repayment phase. Records indicate that approximately Shs141.9 billion worth of loans is currently in the repayment phase. However, only 2.4 billion Shillings has been recovered so far. Wanyama said just 42 percent of beneficiaries whose loans are due are making repayments, while 58 percent have completely defaulted.
Under the scheme, loan repayment typically begins between six and twelve months after graduation. Officials emphasise that beneficiaries who are unable to begin repayments immediately should not default silently. Instead, they are encouraged to notify the ministry so repayment schedules can be revised to reflect their financial ability.
Wanyama noted that despite the ministry’s difficulty in tracing many defaulters, there are encouraging examples of responsible beneficiaries. He revealed that about 100 former students voluntarily repaid their loans even before the expiry of their grace period. The recovery challenge is not unique to the Higher Education Students’ Financing Scheme. Uganda has long struggled to recover funds disbursed through various government lending programmes, with weak enforcement and poor loan tracking contributing to significant losses.
Education experts have previously warned that without stronger recovery mechanisms, the student loan scheme risks becoming financially unsustainable. As a revolving fund, repayments from graduates are intended to finance loans for future students.
In a 2017 study, Dr Robert Kyaligonza of the East African School of Higher Education Studies and Development at Makerere University argued that the scheme’s loan recovery system was too weak to guarantee long-term sustainability. He recommended establishing a professional, technically competent and accountable loan recovery mechanism capable of effectively tracking borrowers after graduation. Dr Kyaligonza also called for stronger legal provisions to improve enforcement and proposed partnering with commercial banks or licensed debt collection agencies to strengthen loan recovery and reduce defaults-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
