In Ghana, the Students Loan Trust Fund (SLTF) provides financial aid to eligible students, allowing them to pursue tertiary education without worrying about immediate costs. Student’s after graduation find it difficult as to how to repay their students loan.
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Here we are going to look at how to repay the Ghana Students Loan focusing on the moratorium period, repayment methods, and penalties for defaulting.
1. Moratorium Period
The moratorium is a grace period given to students before they are required to begin repayment. For the Ghana Students Loan, this period consists of the study period (while still in school) plus an additional two years after completing your course. For example, if you study for four years, you have six years before you are expected to start repaying the loan.
During this moratorium, students are not obliged to make any loan payments, although interest continues to accrue. It’s essential to be aware that the interest rates are not stagnant and are influenced by the Bank of Ghana’s reference rates, which could vary.
The moratorium period begins from the time the loan is disbursed and includes the duration of study plus two years.
During this period, no loan repayment is required.
Interest accumulates, but the SLTF provides flexible repayment plans.
2. When to Start Repayment
Repayment begins immediately after the moratorium period. However, early repayment is encouraged as it helps reduce the accumulated interest and overall loan burden. The SLTF offers various payment options, making it easier for graduates to manage their loan repayment.
3. How to Repay Your Loan
The SLTF provides multiple repayment options, ensuring convenience for all borrowers. Here are the methods:
Direct Payment: Loan beneficiaries can make direct deposits at designated partner banks across Ghana, including institutions like GCB Bank, ADB Bank, and Fidelity Bank.
Mobile Money Payment: In keeping with the digital transformation in banking, SLTF has made mobile payment options available. Payments can be made via mobile money services such as MTN Mobile Money, Vodafone Cash, and AirtelTigo Money.
SSNIT Deductions: If you’re employed in the formal sector, your loan can be repaid through deductions from your Social Security and National Insurance Trust (SSNIT) contributions. This option is seamless and ensures consistent repayment.
4. Penalties for Defaults
Failure to repay your loan after the moratorium period results in penalties. Defaulting on your loan could lead to financial and legal consequences affecting your financial health and even your employability. Here’s what to expect if you default:
Accrued Interest and Penalty Charges: If you fail to make payments after the moratorium, interest continues to accrue, increasing the total amount payable. Additionally, penalty fees are added to the loan balance, making it even more difficult to repay over time.
Credit Report Impact: Defaulting on your student loan can negatively affect your credit score. This can make it harder for you to access credit in the future, such as personal loans or mortgages.
Legal Consequences: SLTF may take legal action to recover unpaid loans. Borrowers could be taken to court, and legal penalties could include wage garnishment or forced repayment plans.
Withholding of Academic Certificates: In some cases, tertiary institutions may withhold your academic certificates until you have settled your debt with the SLTF, limiting your ability to seek formal employment or further education.
5. Steps to Avoid Loan Default
To avoid defaulting and the associated penalties, consider these steps:
Track Your Repayments: Keep accurate records of your loan status, including the interest that accumulates over time. The SLTF provides online tools to help borrowers monitor their repayment progress.
Early Repayment: If you can, start repaying the loan before the moratorium ends. Early payments reduce the overall interest on your loan.
Contact SLTF: If you encounter difficulties repaying the loan, communicate with the SLTF to negotiate a repayment plan or seek temporary relief to avoid penalties.
