Friday, April 12, 2024

The Bursary Loan, A Draconian Trap


By David Chishimba, Association of Unemployed Youths President.

The economy is biting now more than ever, the cost of living is very high and beneficiaries of the bursary offered by GRZ are being victimized by draconian interests and loan deductions. The UPND during its campaign trail when it was in opposition bemoaned the plight of those under the loan scheme and promised not only to restructure but also to suspend the loan deductions until a fair solution is reached once in power. Turning a blind eye now would be hypocrisy of its highest form. The loans board, by law, also has the mandate to ensure that the HELSB is fair in its application and operations.

We have already written to the HELSB to revise the policy which deals with interests and loan deductions but we haven’t gotten a response yet.

The idea of creating a student finance scheme which started in 1962 is one of the best schemes our nation has ever come up with. The adage that education is the key or the best equalizer always stands vindicated whether at the personal or national level. At a personal level, this is proven by so many people who have been removed from poverty by either being educated or indirectly by someone who is educated. At the National level, this is proven by the creation of and better management of new legislation, policies, programs and institutions now.

Many who otherwise may have continued languishing in poverty due to lack of tertiary education but have benefited from the loan scheme, now being managed by the Higher Education Loans and Scholarships Board (HELSB) are now living better lives.

The student loans offered by the government of Zambia cater for tuition and accommodation fees and meal, book and project allowances. The students are required to repay their loans one year after leaving their institutions of learning. This one year grace period starts after a beneficiary completes their studies. During the grace period, the beneficiary can visit the HELSB office and inform them of how much the beneficiary is earning and how much they would like the board to be deducting. The challenge however is that the majority of graduates don’t manage to get employed in the first year. The beneficiary can also decide to pay off their loan at once, which will be the principal plus the interest due at the time of payment, or pay it off at 15% compound annual reducing interest over a longer period. But how many graduates can manage to pay off a K80, 000 or K90, 000 loans at once? Unless someone is from a very wealthy family, a very successful businessman/woman or one who has just become the president of Zambia!

Compound interest in simple terms is interest on interest. One is charged extra interest for paying for a longer period of time. And the more the frequency of payment, the higher the compound interest. For example, if someone owes you 10% compound interest, it will be cheaper to pay it at once than to pay it twice at 5% each.

The HELSB makes deductions every month, and the standard is for 10 years if no engagement is made with the beneficiary, which is equal to 120 months. The deductions are approximately double the principal loan amount which someone got and has to pay back. In practical terms, it’s like paying the loan at approximately 100% simple interest rate. And this is a loan from the government which cares about its youths and wants them to succeed, save and make investments.

Let’s put this into a practical real-life perspective. I have a colleague, who is a youth, who works as an immigration officer. Her principal loan is approximately K90, 000. If we remove other loans, she remains with K3, 600 salaries, the loan deduction is poised at K1, 456 per month. Multiplying this by 120 months makes her total loan K174, 720! This is twice the loan that she got. If we remove PAYE tax at 25% from her remaining salary which is equal to K900 her net pay is equal to K3, 600 – K1, 456 – K900 = K1, 244!

This person has to pay rentals, buy food for the whole month, remain with transport money for going to her workplace and also remain with some money for daily and unexpected expenses all in K1, 244. The cost of living has gone up, for a family of 5, it’s approximately K8, 000, meaning for an individual, it’s around K1, 600. Now imagine someone who has got a family with school-going children earning that amount. Someone remaining with a K2, 500 salary walks away with K419 as their net pay! Is this assistance or a reap off? The HELSB does not care about how much you are earning, their only interest is just to make deductions every month.

The framers of this great initiative intended for it to be a liberator and not a form of financial slavery. However, almost all of those who benefit from the scheme end up being in financial bondage as opposed to freedom. The Higher Education Loans and Scholarships Board (HELSB) Act, act number 31 of 2016, Section 5(2)(h) states that the HELSB should establish structures and guidelines to ensure fairness in the disbursement and application of the Fund. The current state of affairs is in fact in abrogation of the very Act. The 15% annual compound interest rate is draconian and must be revised.

Youths are suffering under these oppressive loans. In all fairness, we are proposing the following;
1. The loan should be restructured for all current beneficiaries. The loan deductions should be reduced to a fair amount, preferably, the deductions should be proportional to a person’s basic salary, that is 15% of a person’s net salary. We know that the total loan will increase due to the compound interest, but it’s a lesser devil.
2. The compound interest rate must be abolished because it’s harsh, repressive and draconian and not in the best interest of most poor Zambian citizens. It should be replaced with a simple interest rate of 15% and the deductions should be proportional to a person’s net salary, that is 15% of their net salary.


Comrades like Anthony Bwalya and all former CBU and UNZA students who are close to the powers that be and are silent are betrayers. Just because they are now drawing huge taxpayers money should not make them forget the demands they were making from the previous government and the promises they were making to the people. We urge them to come forward and assist us in this campaign.

This is a campaign in which everyone should get involved.

For those whose salaries are not being deducted yet, the government will still get to you, so you don’t need to wait until your salaries are being deducted to get outraged, you need to join the campaign so that you find better loan conditions when that day comes.

If you are a student, more especially those benefiting from the loan scheme, you need to get involved, because get it from us, the loans you are getting will come and haunt you later in life. Fight now so that you find better policies and conditions.
To everyone, no one knows tomorrow, it may be your brother, sister, son, daughter, relative or friend caught up in these loans. You need to join the campaign now.

Victory is certain.


  1. Thankfully the Zambian government is not very good in calling in any loans, so it’s best to just go for a loan and then “forget” to repay it. Nobody will know!

  2. From being a bursay scheme, it became a loan.
    Conditions of all loans are that there must be a charge incurred by the borrower in the form of interest. As advocates, go for a complete overhaul of the policy to get intended pro student benefits.
    They promised meal allowance on top of interest free loans to students in the form of free education from grade one to university. Whether it is a pipe dream or an achievable programme is yet to be proved. Was it not just lip service? Kaya.

  3. Disgruntled youth we warned you about voting useless upnd. See your lives. You will need to rely on papas and opening of legs to survive

  4. The best system to fund educational system is through and edownment stratergies not only education by other sectors and alternative Investments see the Yale endowment fund and it’s longevity Now this loan programme under HELSB is a very good educational financing programme for a generation of students to come Ideally you begin to pay 6 months either on completion or fallout for others to access funding you can choose to prepay or follow the standardized depending on your Income and suitability the general principle is that the fee charged is an effective rate much lower than Private in costs and fees it could be from 0% to 3% for those loan categories for the levels It a good financing programme that ought to continue without being onerously so The fund should go endowment way to make it…

  5. Its a good program but all funds must have some performance evaluation including attribution. To operate it like a private and fell to achieve the social economics may be not in it’s Investments policy framework though preservation and achieving a fairly rate of return could help in preservation but this could come from investing in high yielding assets over the short to long-term The best could be also income driven in our economies like Zambia with low industrial absorbtion unless sectors reflect Okay good article and a reminder

  6. It’s about intergenerational equity The principal repayment over those periods for those working and to work otherwise it’s good fund that can transition to an endowment system well managed to a benchmark like Morningstar or the

    Fwaful a the article could relate to that

  7. There is nothing really that all previous Gvnmnts have done that Zambians dont better how to do -nothing. Everything the Gvnmnt does, Zambians always have a better way of doing them. Take Bursaries for example, before they were given,Zambians were like,yeah, fake promises,were are the bursaries -give our students bursaries. Then HH went to shame the critics and gave even more Bursaries than what they were expecting, then the tone now changes “Draconian Trap”. Hahahahhahahahahahhahahah

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