The government is set to review the compound interest charged on student loans, describing it as unfair to unemployed graduates. This announcement was made by the Minister of Education, Haruna Iddrisu, who stated the Ministry is exploring alternatives to alleviate the financial strain on graduates struggling to find work.
Speaking before the Public Accounts Committee (PAC) on Monday, November 3, 2025, Mr. Iddrisu highlighted the need for a fairer repayment structure. He indicated a potential shift from compound interest to a simpler interest model for the Students Loan Trust Fund (SLTF).
"We are thinking of reviewing the interest rate regime of the Student Loan Trust," Mr. Iddrisu told the Committee. "A student gets a loan, completes school, has no job, and you are compounding interest on the loan. Mathematically, what is the fairness in that? We may have to return to a simple interest regime, but without affecting the financial stability of those from whom the money originates."
The Minister clarified that the government's aim is not to destabilize the SLTF's financial foundation but to ensure more equitable repayment terms for graduates facing unemployment. He emphasized that the proposed changes are part of broader efforts to bolster social support programs under the Mahama administration.
These programs include the 'No Fees Stress' initiative and targeted bursaries for individuals with disabilities. Mr. Iddrisu stressed the importance of timely budgetary releases from the Ministry of Finance to maintain these critical interventions.
The Public Accounts Committee also examined the financial performance of the Students Loan Trust Fund, noting ongoing deficits despite some improvements in 2023. The review underscores the need for sustainable solutions to support both students and the financial viability of the SLTF.
Impact on Graduates
The potential shift away from compound interest is expected to provide significant relief to unemployed graduates, reducing the burden of accumulating debt while they search for employment. This change could encourage more students to pursue higher education, knowing that the repayment terms will be more manageable, especially during periods of unemployment.
Looking Ahead
The government's review of the SLTF interest rate policy is a welcome development, signaling a commitment to supporting graduates and ensuring fair access to higher education. Further details on the new interest rate model and implementation timeline are expected to be announced in the coming months.