Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

nouse pitino, 1398

Introduced by Representative Harlin Cast. Abayon

EXPLANATORY NOTE

This bill seeks to make higher education accessible to the poor through the creation of a
National Student Loan Board - an extension on a nationwide basis of the cross-subsidy program
of the University of the Philippines known as the Socialized Tuition and Financial Assistance
Program (STFAP),

This measure was previously filed by Senator Manny Villar in the 15 Congress. Passage

of this Bill is earnestly sought now in the 16% Congress

HARLIN CAST. ABAYON
Representative
First District of Northem Samar


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1398

Introduced by Representative Harlin Cast. Abayon

ANACT
CREATING A NATIONAL STUDENT LOAN BOARD TO FORMULATE AND
IMPLEMENT A NATIONAL STUDENT LOAN PROGRAM FOR THE
POOR, AND APPROPRIATING FUNDS THEREFOR,

Be it enacted by the Senate and House of Representatives of the Philippines in. Congress assembled

SECTION |. Title. - This Act shall be known as the "National Student Loan Program for the
Poor Act.”

SECTION 2. Definition of Terms. - For the purpose of this Act:

(a) "Scholar" refers to a designated qualified beneficiary of contributors who draws from the
National Student Loan Fund to support his tertiary education;

(b) "National Student Loan Fund" refers to a cross-subsidy benefit fund collected by the national
government and lent to qualified scholars;

(©) "National Student Loan Board!" refers to a governing body under the Office of the President
tasked to implement the provisions of this Act;

(d) "Board of Directors" refers to the governing body of the Student Loan Board and shall
‘exercise the powers and duties hereinafter defined.

(e) "Monthly Contribution" refers to the voluntary contributions of income eamers to the Fund,
based on the National Economic Development Authority (NEDA) income brackets;

(f) "Income Brackets" refer to the classification system wherein income eamers as contributors to
the fund are ranked according to annual family income


SECTION 3. National Student Loan Board. - There is hereby created a National Student Loan
Board, hereinafter referred to as the Board. The Board is composed of the Secretary of
Education as ex officio Chairman, the Chairman on Commission on Higher Education (CHED)
as ex officio Vice-Chairman, and the following heads of the following government agencies as
ex officio members

a. Govemment Insurance Service System (GSIS);
b, Social Security System (SSS):

c. Philippine Overseas Employment Administration (POEA);
d. National Anti-Poverty Commission (NAPC);

¢. Presidential Commission on Urban Poor (PCUP), and

f. League of Provincial Governors.

The President of the Philippines shall appoint ten (10) other members of the Board, eight (8) of
whom shall be chosen from nominees taken from state universities and colleges and two (2)

nominees taken from non-governmental organization involved in education,

SECTION 4. Powers and Functions of the Board. - The powers and the functions of the Board
are as follows:

(a) Formulate the National Student Loan Program for the Poor within one (1) year after the
effectivity of this Act,

(b) Promulgate the necessary guidelines, rules and regulations for the lending of funds for the
education of the poor:

(c) Allocate and disburse funds for the education of the poor;

(d) Cancel, suspend, or revoke loans in case of deceit, fraud or cheating of any kind on the part
of the borrower:

(c) Implement the orders, rules, and regulations and guidelines passed by the Board pursuant to
the National Student Loan Program:

(0 Conduct annual spot and random inspections on borrowers;
(g) Conduct studies and researches for the improvement of educational services for the poor:
(h) Appoint the necessary staff or employees for the Board:

(i) Reprimand, suspend or dismiss erring officials and employees of the Student Loan Board
based on the rules and regulations of the Civil Service Commission;

U) Act as trustees for the Investment Portfolio fund which shall be created out of its excess over
semestral operating and lending requirements:


(K) Appoint an investment manager for the Investment Portfolio Fund, should it be deemed
necessary; Provided, That such appointment should not exceed three (3) years, and subject to
performance review prior to renewal:

(W) Appoint, every three (3) years, a professional actuary to perform an actuarial review of the
Student Loan Fund:

(m) Report to the Office of the President on monthly basis; and

(n) Perform such other powers and functions as may be necessary by the President of the
Philippines

SECTION 5. Meetings of the Board. - The Board shall hold monthly meetings to be held every
first Monday of the month. The Chairman of the Board shall be the presiding officer. In the
absence of the Chairman, the Vice-Chairman of the Board shall automatically take over. Minutes
of all meetings shall be recorded and attested to by a simple majority of all regular board
members.

A. At least one meeting shall be devoted to a review of the Student Loan Fund's performance in
terms of the following:

i) Total number of current beneficiaries;
ii) Number of dropouts, voluntary or revoked,

iii) Breakdown of scholars by field of study;

iv) Average academic performance by year of study:
¥)_ Breakdown of scholars by region of origin:
vi) Breakdown of scholars by place of study; and

Vii) Breakdown of scholars by size of annual family income and family livelihood

B. At least one meeting shall be devoted to the review and approval of individual scholars

. At least one meeting per quarter shall be devoted to a financial review of the Student Loan
Fund. This review shall cover, among others, the following:

i) Total contributions received:
ii) Total repayments made; and
iii) Current cash position as against cash requirements for the quarter.

SECTION 6. Quorum. - All meetings shall only be convened with a quorum of simple majority
of the regular board members, All members convened without the said quorum shall be deemed
null and void

SECTION 7. Term of Office. - The members of the Board shall hold office for a term of three (3)
years afier their appointment or until their successors shall have been appointed and qualified

Should a member of the Board fail to complete the term, the successor shall be appointed by the
President of the Philippines but only for the unexpired portion of the term.


‘The members of the Board shall be entitled to reasonable traveling expenses and honoraria.

SECTION 8. Executive Director. - There shall be an executive director who shall be appointed
by the Board and shall have the rank of a bureau director, with a fix term of three (3) years,
renewable for another term.

SECTION 9. Executive Committee. - The Board shall create an Executive Committee who shall
be headed by the Executive Director to determine the number of employees needed to carry out
the functions of the Student Loan Board. The Board shall likewise provide for the qualifications
and compensation of employees in the Executive Committee in accordance with the existing
civil service rules and regulations

The Executive Committee shall exercise the following functions

(a) Recommend the approval of loan applications by the Board;

(b) Review, evaluate and assess programs, plans of action and agenda of the Board;
(©) Review, evaluate and assess the academic standing of loan borrowers;

(d) Recommend the cancellation or revocation of loans, and

(e) Perform such other powers and functions as maybe determined by the Board.

SECTION 10. National Student Loan Fund. - All income eamers as determined under Section 10
hereof, who wants to be members of the National Student Loan Fund and avail of the Benefits
thereof, are hereby required to contribute through salary deductions, to the National Student
Loan Fund. Such monthly contribution shall be based on the NEDA income brackets.

All monthly contributions shall be deposited by the Board in the Development Bank of the
Philippines (DBP) under the name of the National Students Loan Fund.

For the purpose of developing the relevant implementing details of the National Student Loan
Program, the Board shall use as principal reference the Socialized Tuition and Financial
‘Assistance Program (STFAP) of the University of the Philippines,

SECTION 11. Income Brackets. - National Economic Development Authority (NEDA) income
brackets of wage eamers shall be the basis of contributions to the National Student Loan Fund
The contribution structure shall be progressive, from a minimum of one-half percent of
individual income bracket to a maximum of four percent of individual income bracket.

SECTION 12. Beneficiary Loan Amount. - The loan available to a scholar as beneficiary of
income earner who is a member of the National Student Loan Fund shall be subject to the

following terms and conditions:

a. Availability - Loans shall be available only for undergraduate degree courses. This program
shall not cover post graduate courses

b. Loan Size - Loan amount shall be equivalent to the prevailing cost per academic unit at the


University of the Philippines multiplied by eighteen (18) academic units.

¢. Loan Repayment - Loans shall carry an annual interest rate of 15% payable over five (5) years
commencing the first year after graduation of the scholar. Loan amortization computation shall
use the Straight-Line Method. Amortization shall be deductible from salary of income eamers as
members or from the salary of employed graduate scholars. It may also be paid directly to the
fund in case of self-employed graduate scholars.

d. Application - Loans shall be applicable to the school of choice of the designated beneficiary as
scholar, to cover tuition and living allowance. Amounts in excess of the loan needed to cover the
scholar's needs to have to be derived from other sources.

¢, Drawdown - Upon the approval of a loan, an amount equivalent to the tuition of the scholar
can immediately be drawn upon presentation of proof of registration. Balance can be drawn in
five (3) equal monthly installments starting the first month of the semester in the case of schools
using the first semestral system, o'r four (4) equal monthly installments starting the first month of
the trimester in the case of schools using the trimestral system.

SECTION 13. Investment Portfolio. - Monies representing contributions to the Student Loan
Fund shall be placed in an investment portfolio fund. The interest to be derived out of the
investment portfolio shall be used to fund all scholarships for qualified scholars in academic
institutions of their choice, Provided, That such educational institutions are duly accredited by
the DepEd and CHED and are included in a list of qualified tertiary education institutions
prepared by the Board for this Purpose

SECTION 14. Loan Repayments. - The heads of the GSIS. the SSS, the POEA are hereby
directed to closely coordinate with the Board to determine the present occupational status of
borrowers for purposes of loan repayments to the fund.

SECTION 15. Tax Deductibility. - All contributions made to the Fund shall be deductible from
taxable personal income. All loan repayments of graduate beneficiaries shall likewise be
deductible from taxable personal income.

SECTION 16. Implementing Rules and Regulations. - The Department of Education and the
‘Commission on Higher Education shall, within six (6) months from effectivity of this Act, issue
the necessary rules and regulations to carry out the objective of this Act.

SECTION 17. Appropriations. - The initial amount of Ten Million Pesos (P 10,000,000.00) is
hereby appropriated for the effective implementation of this Act. Thereafter, such amounts as
may be necessary for the continued operations of the Board shall be included in the annual
General Appropriations Act

SECTION 18. Separability Clause. - If for any reason any provision of this Act is declared
‘unconstitutional or invalid, parts or provisions of this Act which are not affected shall continue to
be in force and effect


SECTION 19. Repealing Clause. - All laws, executive orders and presidential decrees, rules and
regulations or parts thereof inconsistent with any provisions of this Act are hereby repealed or
amended accordingly

SECTION 20. Effectivity - This act shall take effect fifteen (15) days following its publication in
the Official Gazette or in any two (2) national newspapers of general circulation

Approved.