“CONGRESS OF THE PHILIPPINES
FIFTEENTH CONGRESS
First Regular Session

HOUSE OF REPRESENTATIVES

1247

House Bill No.

Introduced by REPRESENTATIVE MARK A. VILLAR

EXPLANATORY NOTE

The 1987 Constitution of the Republic of the Philippines provides that the
State~shall establish and maintain a system of scholarship grants, student loan
programs, subsidize and other incentives which shall be available to deserving
‘students in both public and private school, especially to the underprivileged (Section
2 (3), Article 14, 1987 Philippine Cosntitution)

In line with this constitutional provision, the attached bill proposes the creation
of a National Student Loan Board to Implement a National Student Loan Program.
The proposed loan program is designed to promote democratization of access to
educational opportunities in post-secondary and tertiary levels to qualified students
‘through financial assistance in the form of an educational loan. The bill aims to
establish and maintain a system of student loan program and other incentives that
will be available to deserving post-secondary and tertiary students in both public and
private schools, especially the underprivileged. If enacted, this student loan program
will certainly be able to open opportunities towards the realization of a better future
to those students who, because of poverty or financial difficulty, have been denied
access to pursue further education.

Irecommend the early approval of this bill.

.

5
MARK A. VILLAR
Representative

Lone District of Las Pifias City


CONGRESS OF THE PHILIPPINES
FIFTEENTH CONGRESS
First Regular Session

HOUSE OF REPRESENTATIVES

House BillNo. __ 1247

Introduced by REPRESENTATIVE MARK A. VILLAR

AN ACT CREATING A NATIONAL STUDENT LOAN BOARD TO IMPLEMENT A
NATIONAL STUDENT LOAN PROGRAM FOR POST SECONDARY AND
TERTIARY EDUCATION, APPROPRIATING FUNDS THEREFOR, AND FOR
OTHER PURPOSES

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

Section 1. Short Title. - This Act shall be known as the “National Student
Loan Program Act of 2010.”

Sec. 2. Declaration of Policy. — It is the declared policy of the State to
protect and promote the right of all citizens to quality education at all levels and shall
take appropriate steps to make such education accessible to all. Further, it is a
declared State policy to establish and maintain a system of scholarship grants,
student loan programs, subsidies, and other incentives which shall be available to
deserving students in both public and private schools, especially to the
underprivileged. For these reasons, the National Student Loan Program is hereby
established to provide for a more effective loan assistance program, and to institute
a system for efficient loan collection.

Sec. 3. Definition of Terms. — For purposes of this Act, the following terms
shall mean:


(a)

(b.)

(c.)

(d.)

(2)

(f)

(g.)

National Student Loan Program refers to the government educational
loan program which shall be designed to promote democratization of
access to educational opportunities in post-secondary and tertiary
levels to qualified students through financial assistance in the form of
an educational loan;

National Student Loan Fund, hereinafter called the “Fund,” refers to a
cross-subsidy benefit fund to be collected by the National Government
and lent to qualified borrowers as hereinafter defined;

National Student Loan Board, hereinafter called the “Loan Board,”
refers to a governing body under the Office of the President tasked to
formulate policies, guidelines and rules and regulation for the
operation, management and supervision of the national student loan
fund for the National Student Loan Program and to implement the
provisions of this Act;

Student Loan Borrower refers to a qualified beneficiary who draws from
the National Student Loan Fund to support his or her post-secondary or
tertiary education:

Deserving Students refers to students qualified under this Act and who
have the ability to continue and finish a post secondary or tertiary
education: Provided, that they are currently enrolled or intend to enroll
in any of the priority courses subsequently identified and determined by
CHED and TESDA;

Delinquent Borrower refers to a student-borrower under the National
Student Loan Program who has not paid in full for a period of three and
a half years after graduation and gainful employment

Post Secondary Education refers to the education and training in non-
degree vocational and technical courses offered in post-secondary


(hy

(.)

(k)

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vocational and technical education institutions, or education in degree
courses offered by higher educational institutions, the completion of
which are attested by a certificate or diploma issued by or with
permission of the Technical Education and Skills Development
Authority (TESDA);

Tertiary Education refers to the education and training in degree
programs offered in higher education institutions, the completion of
which are attested by the Commission on Higher Education (CHED);

Tuition Fee refers to the fees representing direct cost of instruction,
training and other related activities and for the student's use of the
instruction and training facilities;

Miscellaneous Fees and Other School Fees refers to those fees which
cover other necessary costs supportive of instruction, including, but not
limited to medical and dental, athletic, library and laboratory fees;

Educational Expenses refers to the expenses related to the education
of the student, such as books, subsistence and board and lodging, but
excluding tuition and miscellaneous and other school fees;

Clearance refers to the certification issued by the National Bureau of
Investigation indicating whether or not the student borrower has fully
paid the loan.

SEC. 4. National Student Loan Board. - To carry out the purposes of this Act,
there shall be created, a National Student Loan Board to implement a National

Student Loan Program for deserving students. This Board will be under the Office of

the President of the Philippines, but in close coordination with the Commission on
Higher Education (CHED) and the Technical Education and Skills Development
Authority (TESDA).


The National Student Loan Board, hereinafter referred to as the Loan Board,
shall be a governing body that shall formulate policies, guidelines, and rules and

regulations necessary for the operation, management and supervision of the

National Student Loan Fund and the National Student Loan Program for Post

Secondary and Tertiary Education.

SEC. 5. Composition of the Loan Board. — The Loan Board created under this Act
shall be composed of the following members:

1)

2)

3)

4)

5)
6)

7)
8)
9)
10)
11)
12)
13)

14)

15)

The Chairperson of the Commission on Higher Education, as
Chairperson of the National Student Loan Board;

The Director-General of the Technical Education and Skills
Development Authority, as Co-Chairperson;

The Secretary of the Department of Social Welfare and Development
(DSWD), as the Vice Chairperson;

The Secretary of the Department of Labor and Employment, as
Member;

The Secretary of the Department of Finance, as Member;

The Chairperson of the House Committee on Higher & Technical
Education, as Member,

The Chairperson of the Senate Committee on Education, Arts and
Culture, as Member;

The Director-General of the National Economic and Development
Authority (NEDA), as Member;

The Commissioner, Bureau of Immigration, as Member;

The President, Government Service Insurance System, as Member;
The President, Social Security System, as Member;

The Director of the National Bureau of investigation, as Member;

The President, Philippine Association of State Universities and
Colleges (PASUC), as Member;

The President, Coordinating Council of Private Educational
Associations, as Member, and

The President, Association of Local Colleges and Universities, as
Member.


SEC. 6. Compensation of the Loan Board. — The members shall serve
without compensation, but they shall be entitled to per diems and be reimbursed for

necessary expenses incurred in their attendance of meetings of the Loan Board or in

connection with their official business authorized by resolution of the Loan Board,

subject to existing laws and regulations.

SEC. 7. Powers and Functions of the Loan Board. — The powers and
functions of the Loan Board shall include the following:

a)

b)

°)

dq)

e)

f)

To primarily manage, administer and supervise the National Student
Loan Fund for the National Student Loan Program, including the
allocation and disbursement of funds to implement the program;

To allocate and disburse funds for the education of qualified student

borrowers;

To closely coordinate with NEDA in determining the income brackets of
Filipino families for the purpose of identifying qualified student
borrowers:

To closely coordinate with CHED and TESDA in determining the
qualifications of student borrowers for degree and non-degree courses

in various post secondary and tertiary educational institutions;

To closely coordinate with the Bangko Sentral ng Pilipinas in
determining delinquent loan borrowers and setting up a mechanism for
blacklisting them should they apply for loans or credit cards from
banks;

To promulgate the necessary guidelines, rules or regulations for the
lending of funds for the education of qualified student borrowers:


g)

h)

k)

m)

To plan, implement and monitor annual work programs, as well as
evaluate, and submit annual reports in pursuance of the objectives of
this Act;

To conduct investigation, receive documentary proof, and determine
who are the eligible students based on the provisions in this Act;

To institute a system within the National Bureau of Investigation that
shall state in the NBI clearance issued to the applicant whether or not
he or she has unpaid loans from the National Student Loan Program;

To plan and implement a program of generating funds for the loan
program to finance the education of students who qualify under the
provisions of this Act: Provided, however, That the distribution of loans
to the various cities and provinces shall be in proportion to their
population: Provided, further, That support for student recipients shall
be given until they finish their course of study; Provided, finally, that
student debtors shall not be entitled to financial aid for subjects that
they repeat on account of failure or dropping of subjects;

To receive donations, legacies, gifts and other forms of contribution,
whether in cash or in property, from both public and private sources
here and abroad, which shall accrue to the special fund created under
this Act, and to receive and utilize the services and assistance of
experts: Provided, that such donations, legacies and contributions shall
be exempt from taxation and shall be allowable deductions for income
tax purposes;

To be the repository of data and information about student borrowers
under the National Student Loan Program;

To maintain and regularly update every six (6) months, the lists of
qualified student loan borrowers and the priority courses being offered


n)

°)

p)

q)

8)

u)

v)

in public and private post secondary and tertiary educational
institutions;

To issue certificates which shall be valid anywhere in the country as
proof of the eligibility of the student loan borrower to avail
himself/herself of the loan program;

To cancel the certificates issued based on the grounds under Section
21 thereof;

To appoint the necessary staff and/or employees of the Loan Board;

To cancel, suspend, or revoke loans in cases of deceit, fraud or
cheating of any kind on the part of the borrower;

To be the trustees for the Investment Portfolio of the Fund, which shall
be created out of its excess over semestral operating and lending
requirements;

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

To reprimand, suspend or dismiss erring officials and employees of the
Loan Board based on the existing rules, regulations and guidelines
passed by the Loan Board and the rules and regulations of the Civil
Service Commission;

To report to the Office of the President on a monthly basis; and

To perform such other powers and functions as may for the effective
implementation of this Act.


SEC. 8. Term of Office. - The members of the Loan Board shall hold office
for a term of three (3) years after their appointment or until their successors shall
have been appointed or qualified. Should a member of the Loan Board fail to
complete the term, a successor shall be appointed by the President for the
unexpired portion of the term.

SEC. 9. Meetings of the Loan Board. - The Loan Board shall hold twelve (12)
regular board meetings every first Monday of the month. The Chairperson of the
Loan Board may call a special meeting when necessary: Provided, That the
members are notified in writing at least three (3) working days prior to said meeting.
As Chairperson of the Loan Board, the chairperson of the CHED shall be the
presiding officer during board meetings. In the absence of the Chairperson of the
CHED, a CHED Commissioner duly designated by him/her shall represent him/her in
the meeting with all the rights and responsibilities of a regular member: Provided,
however, That during this meeting, the Director-General of the TESDA, who is the
Co-Chairperson of the Loan Board, shail be the Presiding Officer: Provided, further,
that in the absence of both the Chairperson and the Co-Chairperson, the DSWD
Secretary, who is the Vice-Chairperson of the Loan Board, shall act as the Presiding
Officer.

SEC. 10. Quorum for Loan Board Meetings. All regular and emergency
meetings shall only be convened with a quorum of at least fifty percentum (50%) plus
one (1) of the regular Loan Board Members. All meetings convened without the said
quorum shall be deemed null and void.

SEC. 11. The Executive Committee of the Loan Board. - There shall be
created an Executive Committee of the Loan Board, which shall serve as the
secretariat to carry out the functions of the Loan Board. It shall be composed of the
Executive Director and ten (10) Executive Committee Members.

SEC. 12. Powers and Functions of the Executive Committee. — The Executive
Committee, headed by the Executive Director, shall have the following powers

and functions:


a)
b)

¢)

dq)

e)

9)

h)

k)

To recommend the approval of loan applications by the Loan Board;
To review, evaluate and assess programs, plans of action and/or
agenda of the Loan Board;

To implement the orders, rules, regulations and guidelines passed by
the Loan Board;

To plan, impiement and monitor annual work programs and to evaluate
and submit annual reports to the Loan Board in pursuance of the
objectives of this Act;

To conduct investigation, receive documentary proof and determine
who are qualified or eligible to avail themselves of the National Student
Loan Program based on the provisions of this Act;

To maintain, update and submit to the Loan Board all data concerning
the loan program and its beneficiaries;

To review, evaluate and assess the academic standing of loan
borrowers on a regular basis for submission to the Loan Board

To conduct annual spot and random inspections on borrowers and to
determine their credit standing and whereabouts after graduation;

To issue certificates, upon approval of the Loan Board, which shall be
valid anywhere in the Philippines as proof of the eligibility of the student
loan borrower who will avail himself/herself of the National Student
Loan Program;

To recommend the cancellation of certificates and/or revocation of
loans; and

To perform such other powers and functions as may be determined by
the Loan Board.

SEC. 13. Executive Director of the Executive Committee of the Loan Board. —
The Loan Board shall appoint an Executive Director who shall head the Executive

Committee of the Loan Board. He/She must be a natural-born citizen of the

Philippines and must be a holder of Career Executive Service Officers (CESO)

eligibility.

The Executive Director shall receive a monthly compensation equivalent to

salary grade 28. He/She shall serve a term of three (3) years and can be

reappointed for another term.


SEC. 14. Executive Committee Members. — There shali be ten (10)
Executive Committee Members, eight (8) members of whom shall come from the
State Universities and Colleges, and two (2) from the private sector, all of whom
shall be appointed by the National Student Loan Board. Each Executive Committee
Member shall receive a monthly compensation equivalent to salary grade 26 and
shall have the organizational designation of "Managing Director’ of a specific
functional area of the Loan Board. The term of the Executive Committee Members
shall be coterminous with that of the Executive Director.

SEC. 15. Loan Board Staff/Employees. — The Loan Board shall determine
the number of stafffemployees needed to carry out the functions of the Board,
‘subject to Civil Service rules and regulations. The Civil Service Commission shall
likewise provide for the qualifications and compensation of applicants based on
‘existing rules and regulations on the hiring of civil servants.

SEC. 16. National Student Loan Trust Fund.- The Loan Board shall establish
a Loan Trust Fund for CHED and TESDA to cover the tuition, miscellaneous and
other school fees and other educational expenses of the student borrower under the
National Student Loan Program. The amount derived from loan repayments of
borrowers, which include payment for the principal and interests, shall accrue to the
Loan Trust Fund.

SEC. 17. Loanable Amount. - The Loan Board shall determine the maximum
amount that can be availed of by student loan borrowers. Educational loans under
this Act may cover matriculation and other school fees and educational expenses for
books, subsistence, and board and lodging: Provided, that amounts covering
payments for tuition and other school fees shall be paid directly to the school
concerned.

The loans available to student borrowers shall be subject to the following

terms and conditions
a) Availability — Loans under the National Student Loan Program shall be
available for post-secondary non-degree and undergraduate degree

10


b)

¢)

d)

programs under the TESDA and tertiary or degree programs under the
CHED, respectively. This program shall not cover postgraduate
courses;

Loan Size ~ The loanable amount shall be equivalent to the prevailing
cost per academic unit at the University of the Philippines multiplied by
twenty-one (21) academic units or subject to the decision of the Loan
Board;

Loan Applicability — The loan shall be applicable to the school of choice
of the student loan borrower, whether it is a public or private school
offering post secondary technical or vocational courses or college
degree programs, to cover tuition fees and living allowance. Amounts
in excess of the loan needed to cover the student borrower's needs
shall have to be derived from other sources

Drawdown — Upon approval of a loan, an amount equivalent to the
tuition of the student loan borrower can immediately be drawn upon
presentation of proof of registration. Balance can be drawn in five (5)
equal monthly installments starting the first month of the semester in
the case of schools using the semestral system, or four (4) equal
monthly installments starting the first month of the trimester in the case
of schools using the trimestral system.

SEC. 18. Interest Rate and Loan Collection Scheme. - In the formulation of
policies regarding the interest and loan repayment or collection scheme for the

National Student Loan Program, the following principles must be observed:

a)

b)

Any loan granted shall be paid by the student-debtor after he has
finished the course or profession for which the proceeds of the loan
were expended, but only after a period of two (2) years from the time
he has acquired gainful employment: Provided, That the government
shall endeavor to give priority to students under the program in
obtaining possible employment.

Voluntary repayment of loans shall start anytime the loan borrower
wants to pay even before finishing the course or having gainful


cI

dq)

employment: Provided, That a reduced rate of five percent (5%) per
annum shall apply:

nterest at the rate of not more than five percent (5%) per annum shall
be applied to the loan or the balance thereof. The Loan Board shall
formulate a loan collection scheme table as guide of the deputized
bank and all concerned agencies in computing interest rates; and

The NBI shall determine the employment status and whereabouts of
the delinquent loan borrowers for clearance application and/or renewal.

SEC. 19. Qualification Requirements of Applicant. — A student eligible under
this Act shall have the following entry requirements:

1)
2)

3)

4)

5)

Filipino citizen;

Currently enrolled or intend to enroll in any of the courses to be
determined by CHED or TESDA;

Has parents or guardians with a gross annual income to be
determined by the NEDA income bracket;

Has stopped schooling for more than one year due to valid reasons,
but intends to return to school to finish the remaining semesters
required by the course or program; and

Does not enjoy any scholarship or study grant.

SEC. 20. Limitations. - The right of any qualified student to avail himself of the
loan assistance under this Act shall not apply when:

(1)

(2)

(3)

(4)

He/she fails for one (1) school year in the majority of the academic
subjects in which he has enrolled during the course of his study unless
such failure is due to some valid cause beyond his control;

He/she has been declared absent without official leave (AWOL) or is
permanently disqualified or expelled from the educational institution
where he is enrolled in;

He/she stops schooling for one (1) school year unless such is due to
some valid cause beyond his control; and

Helshe is convicted of any crime.


SEC. 21. Implementing Rules and Regulations. - The CHED and TESDA
shall, within sixty (60) days from the effectivity of this Act, issue such rules and
regulations necessary for the proper implementation of this Act.

SEC. 22. Appropriations. - There is hereby appropriated the amount of P1
billion (P1,000,000,000.00) out of the funds in the National Treasury, not otherwise
appropriated, to be used to finance the National Student Loan Program to carry out
the provisions of this Act. Thereafter, such sum as may be necessary for its
continued implementation shall be included in the Annual General Appropriations
Act

SEC. 23. Repealing Clause. - All laws, presidential decrees, executive orders,
proclamations, rules and regulations which are inconsistent with the provisions of
this Act are hereby repealed or modified accordingly.

SEC. 24. Separability Clause. - If any provision of this Act is held invalid or
unconstitutional, other provisions not affected shall continue to be in full force and
effect.

SEC. 25. Effectivity. This Act shall take effect fifteen (15) days after its
complete publication in at least two (2) newspapers of general circulation.

Approved,

13