The Cabinet of Ministers has recently approved several important recommendations aimed at revising the fees payable to non-governmental higher education institutes for courses under the eighth stage of the interest-free student loan scheme (student loans). This decision is part of ongoing efforts to make higher education more accessible to students while ensuring the sustainability of the loan scheme.
Key Recommendations and Updates
1. Revised Course Fees Based on Expert Recommendations
One of the most significant updates is the revision of course fees for the eighth stage of the loan scheme. These revisions will be based on the recommendations of the Technological Consultative Committee, which was appointed by the Ministry of Education. The committee’s role is to assess and provide advice on the best practices for setting course fees that align with current educational and economic conditions.
By adjusting the fees, the government aims to ensure that both the quality of education and the financial viability of the loan scheme are maintained. This step is crucial, as it reflects an effort to balance the cost of private higher education with the resources available to students under the loan scheme.
2. Involving the National Savings Bank to Share Financial Responsibility
In addition to the current participating banks—Bank of Ceylon and People’s Bank—the National Savings Bank will now be included in the loan scheme. This decision has been made to distribute the financial risks across multiple banks, thereby preventing any single institution from bearing the entire burden of the loan scheme.
This collaboration between multiple banks is expected to strengthen the scheme by providing more stable financial backing. It also reflects the government’s commitment to ensuring that students continue to have access to interest-free loans without causing undue financial stress on the banking sector.(student loans)
3. Introduction of a Minimum Loan Interest Rate
Though the student loan scheme is labeled as “interest-free,” there are provisions for a minimal interest rate to be applied. From the eighth stage onward, a minimum loan interest rate of 13% will be implemented. Additionally, there will be a floating rate of six months AWPLR (Average Weighted Prime Lending Rate) plus 1%. This rate will be reviewed annually to adjust for market conditions.
The introduction of this minimal interest rate is seen as a way to balance the costs of the scheme for the government and banks, ensuring that it remains sustainable over the long term. However, the overall intention is to keep the financial burden on students as low as possible, ensuring that higher education remains within reach for those who need it.(student loans)
4. Increased Enrolment Capacity: 7,000 Students Per Stage
Another key update is the decision to enroll 7,000 students in each stage of the loan scheme starting from the eighth stage. This represents a significant increase in the number of students who will benefit from the program. By expanding the number of participants, the government is addressing the growing demand for higher education and the need for financial support among students.
This increase in enrolment will likely encourage more students to pursue degrees from non-governmental higher education institutions, which are often seen as offering specialized programs that are not always available in public universities.
Background of the Interest-Free Student Loan Scheme
The interest-free student loan scheme was initially introduced in 2017 as part of a broader initiative to improve access to higher education in Sri Lanka. The scheme allows students to enroll in degree programs at non-governmental higher education institutes without the burden of upfront fees, as the government covers the costs through a loan that students repay after completing their education.
This initiative has been particularly valuable for students who would otherwise be unable to afford private higher education. Over the years, it has played a crucial role in expanding access to a wide range of degree programs, many of which are not available in government-funded universities.
April 2023: Formation of a Committee to Revise Fees
In April 2023, recognizing the need to reassess the structure of the loan scheme, the Cabinet approved the appointment of a committee tasked with revising the fees payable to non-governmental higher education institutes. The committee was chaired by the Deputy Secretary of the Treasury, and its primary responsibility was to make recommendations on how to ensure the continued effectiveness of the loan scheme while addressing the financial realities faced by educational institutions.
The committee’s recommendations were presented to the Cabinet by the Minister of Higher Education and were subsequently approved, paving the way for the revisions announced in the latest update.
The Future of Higher Education Funding in Sri Lanka
The approval of these recommendations marks a significant step forward in the government’s efforts to improve higher education funding in Sri Lanka. By revising course fees, involving additional financial institutions, and introducing a minimal interest rate, the government is seeking to make the loan scheme more sustainable and accessible.(student loans)
The expansion of student enrolment capacity will also help meet the growing demand for higher education, especially in fields that are not widely available at public institutions. With 7,000 students being supported in each stage, more young people will be able to pursue their academic goals without the stress of immediate financial burdens.
Moreover, these changes reflect a broader vision of making higher education more inclusive and affordable, ensuring that students from all backgrounds have the opportunity to pursue their dreams. The interest-free student loan scheme, with its revised structure, is poised to play an even more significant role in shaping the future of higher education in Sri Lanka.(student loans)
Conclusion
The Cabinet’s approval of these updates demonstrates a strong commitment to supporting students and ensuring that the loan scheme remains viable. The revised course fees, expanded enrolment, and collaboration with additional banks are all steps that will strengthen the program and help more students access higher education. With these changes, the interest-free student loan scheme will continue to provide critical financial support, helping to build a brighter future for students across the country.
