* REGEI EIVED

MUL 01 20197

Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 0229

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

7
EXPLANATORY NOTE

College education is a heavy burden not only for the parents but for the entire family. Stories
abound where parents had to sell their farm animals, if not their farm lands, or borrow money
against their houses, or beg from relatives - just to send a child through college. In many
instances, one or two of the child’s siblings have to stop in order for the family to survive while
they continue to support the one chosen to attend the university.

To assist poor families, especially those with bright children, to have the opportunity to gain
higher education, government has introduced various affirmative action programs such as
scholarships, grants-in-aid, student loans, and part-time employment, among others. The Study-
Now-Pay-Later college loan program was implemented in the mid-70s by President Marcos and
had some level of successes, But the economic and debt crises that ensued limited the
government’s fiscal space and the overall impact of the program, even as this was resurrected
later in one form or another.

In 2015, R.A. 10687 or the Unified Student Financial Assistance System for Tertiary Education
(UniFAST) Act was approved which brought together all Student Financial Assistance Programs
(StuFAPs) under one roof. In A.Y. 2015-2016, funding for various reached PhPS.65 billion. But
shared by a total of 289,045 students nationwide, the average assistance per person was only
some P19,000 for the whole year ~ which can barely cover tuition expenses. In 2016, R.A.
Republic Act 10931 or the Universal Access to Quality Tertiary Education Act was enacted
providing for free tuition and exemption in all other fees to all students of state colleges and
universities (SUCs).



What is sadly missing in all these is the fact that tuition and academic expenses are but a small
portion of the overall cost of sending a child through college. In order to study well, the child
must have all the support to enable him or her to focus — to be well fed and clothed, to live in an
environment that is highly conducive to learning, and to be armed with the books, supplies and
equipment that he/she will need for coursework. Unfortunately, from a CHED budget of over P
60 billion in 2018, only P1 Billion has been made available for student loans. If student living
expenses were at only P5,000 per month, this could barely finance the needs of 16,000 college
students or barely one half of one percent (0.05%) out of the country’s 2.982 million college
students.

Only one out of every five Filipinos is able to get to college. Still, only around half of them
would reach third or fourth year, if not eventually graduate. According to a study by the Angelo
King Institute, the participation rate in the Philippines in higher education over several decades
has remained relatively stagnant at 23% compared with upwards of 30% in our neighboring
countries like Vietnam, Indonesia and Malaysia, $3% in Thailand and 94% in Korea.' Poverty
issues and the lack of sources of financing have always been major reasons. The absence of
institutional mechanisms to address the demand for college funding has been considered as a
kind of market failure.

This College Living Expenses Financing (CLEF) Bill aims to address these needs and to
complement and complete the earlier student assistance programs in terms of support to the
Filipino family in achieving their aspirations and their dreams.

Approval of this Bill is earnestly requested.

Alffed D. Vrgas LIL

+ Eric Jayson V, Asuncion and Tereso S. Tullao, Jr. Evaluation of Unified Student Financial Assistance System
in Tertiary Education (UniFAST) in Addressing Capital Market Imperfection in the Philippines. Working Paper Series
2018-02-049, Manila: Angelo King Institute, De La Salle University


Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. apes

INTRODUCED BY REPRESENTATIVE ALFRED VARGAS

AN ACT
TO ESTABLISH THE COLLEGE LIVING EXPENSES FINANCING
(CLEF) PROGRAM TO SUPPORT HIGHER STUDIES FOR HUNDREDS
OF THOUSANDS MORE FILIPINO STUDENTS OF GOOD ACADEMIC
STANDING, MANDATING THE NATIONAL GOVERNMENT AND
LOCAL GOVERNMENT UNITS TO SET UP LOAN GUARANTEE FUNDS
ON STUDENT LOANS TO BE PROVIDED BY BANKS, FINANCIAL
INSTITUTIONS AND OTHER CREDIT PROVIDERS FOR THE CLEF
PROGRAM, 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. Tisle. This Act shall hereinafter be referred to as the “College Educational Expenses
Financing (CLEF) Act of 2019”.

Section 2. Declaration of Policy. As proclaimed in R.A. 10931: “quality education is an
inalienable right of all Filipinos and it is the policy of the State to protect and promote the rights
of all students to quality education at all levels. Therefore, the State shall take appropriate steps
to make such education accessible to all.”

RA 10687 provides that: "the State shall provide adequate funding and such other mechanisms to
increase the participation rate among all socioeconomic classes in Tertiary Education, especially



the poor..., thereby promoting equitable and Rationalized Access by poor Filipinos to quality
Tertiary Education.”

In furtherance of these policies, it is further declared the policy of the State to promote the
capacities of all its citizens to improve their lives and life chances by way of greater and
enhanced access to financial resources towards achieving for themselves quality higher
education.

Section 3. Coverage. The CLEF program shall be made available to all Filipino students who are
either currently enrolled at the time of the effectivity of the Act, or admitted to enroll at any time
thereafter, in courses leading to a bachelor’s degree in any higher educational institution (HEI)
accredited by the Commission on Higher Education (CHED).

Section 4. Nature of the Financial Assistance. The CLEF Program is a long term personal loan
program designed to provide for the living expenses of Filipino college students. Living
expenses shall cover, but not limited to, the following:

> board and lodging

v

pocket money

&

transportation costs

food expenses

vv

uniforms and personal clothing

<s

books and supplies
> other miscellaneous expenses

Each eligible student shall be entitled to a maximum loan amount of P50,000 per semester or
enrolment and a maximum of P400,000, allowing for up to five years of college enrolments.

‘The loan shall have a maximum term of twenty five (25) years, an interest rate of 6% and a grace
period on principal and interest payments so that amortizations shall start one year from the date
Of graduation or the end of the last semester of enrolment, whichever is later.

‘The loan shall be provided by and disbursed through private or government banks, financial
service entities accredited with the Bangko Sentral ng Pilipinas (BSP) and/or government
financial institutions, including the Social Security System (SSS), Government Service Insurance
System (GSIS), or Home Development Mutual (Pag-IBIG) Fund.

The administration of the CLEF Program shall be a shared responsibility of the (1) CHED —
which shall process and endorse the loan application requirements of eligible students, (2) the
financial institutions — which shall release the amounts based on an approved disbursement
program agreed with the student, and (3) the collecting agents ~ which can be a bank, a financial
service institution, financial technology service (FinTech) accredited with the Bangko Sentral,
the SSS, GSIS or Pag-IBIG.



Seetion 5. Credit Guarantee by National Government and LGUs. \n order to encourage the
banks and financial institutions to provide the needed resources for the Program, the CLEF
Guarantee Fund is hereby created, which shall be funded by yearly appropriations from the
national government in the amount of ten billion pesos (P10,000,000,000 ) over the next ten
years to be deposited with the National Treasury. In like manner, local government units
(LGUs), including provinces, cities, municipalities and barangays, shall set aside a minimum of
2% of their Internal Revenue Allotments (IRA) as additional guarantee support for CLEF loans
to students from their respective constituencies, to be deposited with the Land Bank or
Development Bank of the Philippines (DBP). The guarantee funds may support loans to the
students up to five times of its nominal value. The endorsement of the UniFAST Board and/or
the LGU concerned shall be sufficient basis for the credit guarantee for the specific beneficiary
student.

Seetion 6. Tracking and Monitoring. Consistent with its mandate under R.A. 10687 and R.A.
10931, the UniFAST Board shall monitor and track the progress of the student loan beneficiaries
under the CLEF Program to ensure that minimum academic standards of educational
achievements are met. For purposes of encouraging good student performance, Sections 11, 12
and 13 of R.A. 10687 shall also apply to the CLEF Program

For purposes of tracking after graduation or leaving college without graduating, Section 15 (¢) of
R.A. 10687 shall also apply to CLEF beneficiaries as part of the loan contract that they shall
sign.

Seetion 7. Implementing Rules and Regulations. ~ Within thirty (30) days from the effectivity of
this Act, the UniFAST Board shall consult with the local government leagues, and officials from
the Bureau of Treasury, Bankers Association of the Philippines, Land Bank, Development Bank
of the Philippines, SSS, GSIS, Pag-IBIG, and other stakeholders and promulgate the
Implementing Rules and Regulations necessary for the proper implementation of this Act.

Section 8. 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 full force and effect.

Section 9. Non-Impairment Clause.— Nothing in this Act shall be construed as to diminish,
impair, or repeal rights recognized, granted, or made available to disadvantaged, marginalized, or
specific sectors under existing laws.

Section 10. Repealing Clause. — All laws, executive orders, presidential decrees, Implementing
Rules and Regulations inconsistent with this Act are hereby repealed or modified accordingly.

Section 11. Effectivity. — This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in two newspapers of general circulation.

Approved.