Salceda pushes for implementation of Australian model for enhanced student loans program under Free College Tuition Law

January 21st, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is pushing for the full implementation of the Higher Education Contribution Scheme (HECS) under the Free College Tuition Law (RA 10931), a low-interest student loans program, where students will amortize their tuition loans only when they reach a certain income level. Salceda says the scheme will ensure that “anybody can go to any private school they choose as long as they pass the admissions requirements of that school.”

“Undeniably, there are private school programs, especially in top private universities, that state universities and colleges cannot offer. Private universities are also a source of innovation in higher education in the country. We want to make sure that every student can go to any school they choose as long as they pass the requirements of that school,” Salceda said.

“Section 8 of RA 10931 would allow that by providing very low-interest student loans that borrowers can pay as a small deduction from their salaries once they reach a certain salary level. If they earn below that level, they will not yet be required to start paying,” Salceda, the principal author of the Free College Tuition Law, added.

Salceda made the pitch in his acceptance speech for a Plaque of Appreciation awarded by the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA) in recognition of his principal authorship and sponsorship of a clearer tax regime for private schools under RA 11635, which President Duterte recently signed.

COCOPEA gave Salceda the award on January 20, 2022.

“The theory is that private expenditures on education are a means to increase long-term personal income. Hence, a portion of that hypothetical future income can be borrowed by the student to finance present education fees,” Salceda said in his speech.

“With increased income in the future, the student should be able to gradually pay off the loan through reasonable monthly contributions incorporated in the SSS or GSIS contributions. Payment of the loan amount will commence once the beneficiary secures any gainful employment with compensation, remuneration or earnings that reaches the Compulsory Repayment Threshold (CRT). Hence, the student repays only once capable, and, being state-financed, the loans do not balloon unlike the US model,” Salceda added.

Salceda describes the scheme as a “progressive study-now, pay-later scheme.”

Salceda added that the province of Albay adopted this model when he was Governor from 2007 to 2016.

“When I became Governor of Albay in 2007, my rallying cry was “A College Graduate in Every Family.” To achieve this goal, we pioneered the Albay Higher Education Contribution Scheme or AHECS, which became the model for the Free College Tuition Law,” Salceda said.

Salceda also described the scheme as a “balancing factor” to the free college tuition scheme in state universities and colleges.

“If state university is now free, we need to find a balancing factor to make private education affordable, too.”

“In the meantime, I will continue the fight for higher tertiary education subsidy or TES for private schools and the implementation of a more universal HECS,” Salceda concluded. #

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