State-owned Land Bank of the Philippines (LandBank) rolled out a new lending program it said would help families in need of financial assistance to continue sending children to school amid the lockdown.
The lending window will allow parents, guardians or benefactors of students in private schools to borrow an amount equivalent to one school year or two semesters—or up to P150,000 per student, LandBank said. LandBank dubbed the facility as the “Interim Students’ Loan for Tuition toward Upliftment of Education for the Development of the Youth,” or i-STUDY.
In her report, LandBank President and CEO Cecilia Borromeo said they introduced the program “to heed the President’s call to support students in this time of crisis.”
“This program will not only help families who have kids they want to send to school, but will also assist private schools and downstream industries to sustain and continue their operations,” she was quoted in the statement as saying.
Loans under the program, which cannot exceed P300,000 per eligible borrower, carry a fixed-interest rate of 5 percent per year.
Short-term loans payable within one year are available for pre-school, primary and secondary school students under the program, while term loans payable up to a maximum of three years, inclusive of a one-year grace period on the principal amount are available for tertiary level students.
In May, LandBank also launched a lending program targeting private schools shut down because of lockdown measures.
LandBank said an initial batch of over 60 private educational institutions expressed interest in tapping its facility it dubbed “Access to Academic Development to Empower the Masses towards Endless Opportunities,” or Academe.
As of August 19, the LandBank said its board has approved the application under the Academe program of four institutions for loans with a combined amount of P330 million.
Borromeo said five schools have also partially submitted their documentary requirements for the program, while six loan applications are up for approval during the September 2020 meeting of the Bank’s board and credit committee.
Submission of the documentary requirements are still pending for 18 other schools that have signified their intention to avail of the Academe lending program.
Another 32 schools across the country have likewise expressed interest in availing of the facility, Borromeo said.
The P3-billion lending window, which is available until June 30, 2021, aims to extend credit to private high schools, private technical-vocational education training institutions, colleges and universities with the goal of encouraging students to enroll under a “study now, pay later” setup by allowing their parents to issue promissory notes for their academic fees.
These promissory notes will then be refinanced or rediscounted under the program, with schools allowed to borrow as much as 70 percent of the sub-promissory note per semester and subject.
However, schools can only borrow up to a certain maximum amount based on the net borrowing capacity of the institution.
Loans under the program carry an interest rate of 3 percent per annum and are payable based on the maturity of the sub-promissory notes but not to exceed three years.