The Students Loan Trust Fund (SLTF), has taken a significant step in its quest to ensure the repayment of student loans. In an unprecedented move, the SLTF has initiated legal proceedings against the first batch of employers who have failed to comply with recovery of students loan from beneficiaries in the formal sector under the Students Loan Trust Fund Act 2011 (Act 820). At section 24, the Act imposes a statutory duty on employers to deduct loan repayments from the salaries of employees who benefited under the students loan scheme and remit same to the Trust Fund. The Financial Forensics Unit of the Ghana Police Criminal Investigations Department (CID), upon complaint by the Fund has issued summons to these employers. Our sources confirmed, eight institutions have already been served with this process to appear before the CID and show cause why they should not be prosecuted.
Students loan is a creature of public policy entrusted to the SLTF, an agency of government under the Students Loan Trust Fund Act 2011, Act 820. The core mandate of the Trust Fund is to disburse loans to eligible students to cover tuition, accommodation, and other educational expenses and recover same when they are due. However, repayment has become very crucial to ensure the sustainability of the Fund and to financially support the future generation. The duty imposed on employers under Section 24, Act 820 is one of a statutory duty that requires strict compliance. Unlike contractual duty, a statutory duty does not require privity in order to discharge any obligation expected under it. In other words, once a duty is imposed by law, the bearer does not need to be a party to any contract in order to discharge that duty. The effect is that employers in Ghana do not need to be a party to a student loan contract in order to deduct students loan for repayments purposes.
As noted above, employers are required to deduct loan repayments from the salaries of employees who benefited from students loan and remit these payments to the Trust Fund. However, this has been a challenge with some employees failing to meet their obligations by reason of employer non-compliance. In response to this, the SLTF has decided to hold such employers accountable under section 37 of Act 820 which provides to the effect that where an employer fails to deduct and remit students loan repayments to the Fund, that employer is liable and directors of that company or partners of that firm are personally liable.
The failure of some employers to adhere to this law has prompted the SLTF to initiate this legal proceeding. The Police CID has summoned these non-complying employers with a lifeline to comply or process them for court in the coming days. By this step taken by the Trust Fund, other employers are warned of potential legal action if they continue to refuse and neglect their responsibility in remitting students loan repayments.
Ms. Rosemary Aryee, the Deputy Director, Repayment and Resource Mobilization of SLTF, in the process stated, “The non-compliance of employers in deducting and paying of loan on behalf of their employees has been a longstanding issue that hinders our ability to sustain the fund to support students who are currently in school and the future generations. We have decided to take legal action as a last resort to ensure compliance.”
The CEO Nana Kwaku Agyei Yeboah, expressed the organization’s determination to recover outstanding loans and ensure that the fund can continue to provide financial support to Ghanaian students seeking higher education. “The SLTF plays a crucial role in promoting access to higher education in Ghana. It is our responsibility to protect the fund’s sustainability, and this includes holding employers accountable for their actions,” He said.
Even though the names of the eight institutions that have been served notices cannot be disclosed at this stage of the proceedings, the SLTF has made it clear that the Fund is committed to ensuring that employers across Ghana fulfill their obligations in supporting the higher education of their employees.
This move by the SLTF is seen as a significant step towards creating a culture of responsibility and accountability among employers and their employees who are past borrowers of the Fund; and ensuring that the fund continues to provide opportunities for future students to access higher education. Employers and past borrowers who have concerns or questions about their obligations to the SLTF are encouraged to reach out to the Trust Fund for clarification. The hope is that through this initiative, loan repayments will continue to increase, allowing the SLTF to continue with its mission of supporting educational advancement in Ghana.