Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

any
House Bill No. 37i9

Introduced by Honorable Roy M. Loyola and
Honorable Erineo S. Maliksi

EXPLANATORY NOTE

At present, there could be no denying the fact that capable and
deserving students are prevented from pursuing post-secondary education
due to their dire financial situation. While it is true that State is desperately
trying to address the situation, but with limited scope and coverage of
existing state scholarships and grants, the results have lots to be desired
from. While included in the term “financial aid’, higher education loans
differ from scholarships and grants in the sense that the former must be
paid back by the student. Therefore, in view of the limited funds available
for the State to support its program of educational grants, scholarships,
and dole-outs, it is apparent that educational loan is the more viable
solution to the problem.

The first legislation on student loans was approved as early as
4969, when the Student Loan Fund Authority was set up under the then
Department of Education and Culture. However, it failed to live up to
expectations and was eventually abolished in 1976.

On 13 May 1976, a “Study Now Pay Later Plan’ (SNPL) was
instituted by Presidential Decree No. 932. Thereafter, it was succeeded by


Republic Act No. 6728 otherwise known as “Government Assistance to
Students and Teachers in Private Education Act’, as amended by
Republic Act No. 8545, otherwise known as “The Expanded Government
Assistance to Students and Teachers in Private Education Act”.

Sadly, these old SNPL programs of the State were marred with
serious flaws, namely, negligible loan amounts, low coverage, very limited

slots, and low repayment rates.

This bill seeks to address the shortcomings of the old “Study Now
Pay Later Plan" by rationalizing its provisions. Initially, within five (5) years
from its approval, the coverage is made limited to cover only those
enrolled or intending to enrol in technical vocational education and training
certified by the TESDA as priority. Thereafter, it will be made to apply to all
technical vocational education and training and to all degree courses. The
loanable amounts, so as to make an impact, will be increased to an
amount not less than seventy-five percent (75%) of the student-borrower’s
tuition. An efficient system of collection is also enjoined. The Government
Security Insurance Service (GSIS) and the Social Security System (SSS)
are mandated to act as collection agents for the CHED and TESDA. For
this purpose, the GSIS and SSS are given the power to assess students-
borrowers of their monthly loan repayment amortizations and the
concerned employers are given the authority to automatically withhold and
deduct said loan repayments from the salaries of the student-borrowers.

Through a dynamic, efficient, and effective student loan program,
wherein qualified students will be able to finance their tertiary education
through a loan from the State and pay their indebtedness at a latter date
when they are in a position to do so, that is, when they already have jobs,
the State could finally comply with its elusive Constitutional mandate of
protecting and promoting the right of al its citizens to quality education.


In light of the foregoing, we earnestly urge our esteemed
colleagues in the House of Representatives to join us in seeking
immediate approval of this Bill

HOW, [ROY M. LOYOLA HON. if INEO S. MALIKS!


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila *

Fifteenth Congress
First Regular Session

House BillNo.___ 9.719

Introduced by Honorable Roy M. Loyola and Honorable Erineo S. Maliksi

AN ACT INSTITUTING A COMPHREHENSIVE STUDENT LOAN PROGRAM FOR
ALL POST-SECONDARY EDUCATION ON A “STUDY NOW PAY LATER”
SCHEME AND FOR OTHER PURPOSES.

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

SECTION 1. Short Title. This Act shall be known as the “Study Now Pay Later

Act of 2010"

SECTION 2. Declaration of Policy. The State is mandated by the Constitution
to protect and promote the right of all its citizens to quality education at all levels, make
such education accessible to all, and maintain a system of scholarship grants, student
loan programs, subsidies, and other incentives. In view of the limited funds available for
scholarship grants, scholarships and dole-outs, the State turn to a comprehensive loan
program as a more viable solution to providing its citizen with equal opportunity to
higher education. While it is true that “Study Now Pay Later" programs have been

implemented by the State in the past, the same proved to be ineffective, inefficient, and


unsuccessful in fulfilling its purpose. Thus, the need to rationalize, to make it more
adoptable to the present situation, by increasing its coverage, instituting a more

efficient loan collection system, and simplify its operation.

SECTION. 3. Definition of Terms. For purposes of this Act, the following terms

shall mean:

1) “Study Now Pay Later Program” refers to the loan facility established by
the government offered to poor but deserving student-borrowers enrolled in or
intending to enrol in any post secondary education.

2) “Student-borrower” refers to a person enrolled in or intends to enrol in post
secondary education who qualifies to draw from the Study Now Pay Later
Plan established in this Act to support his/her post-secondary education.

3

“Post-secondary Education” refers to any education, training and/or
instruction from any institution duly recognized and/or accredited by the
CHED and TESDA, the completion of which are attested by a diploma or
certificate issued by or with the permission and authority of the CHED or
TESDA, respectively;

4) “Degree Course” refers to formal eduction offered by institutions of higher

learning recognized by the Commission on Higher Education (CHED).

5) “Technical Vocational Education and Training” refers to non-degree
vocational and technical short courses offered by the Technical Education
and Skills Development Authority (TESDA) or offered by other similar

institutions accredited and/or recognized by TESDA.


SECTION 4. Administration of the Study Now Pay Later Program. The
Commission on Higher Education (CHED) shall have administrative control and
supervision over loans granted to student-borrowers enrolled in degree courses, The
Technical Education and Skills Development Authority (TESDA) shall have
administrative control and supervision over loans granted to student-borrowers enrolled
in technical vocational education and training. To accomplish the foregoing task, the
CHED and the TESDA are hereby granted the following powers and functions:

a) Formulate policies, standards, and guidelines necessary for the
implementation of this Act;

b) Develop an efficient system of disbursement and collection of payments

of loans granted under this Act, including but not limited to entering into
agreements with the Government Service Insurance System (GSIS), the
Social Security System (SSS), private and public banks and banking
intermediaries, and other government financial institutions;

c)

Issue rules and regulations necessary to carry-out the provisions of this
Act;

d) Exercise such other powers and functions reasonably necessary for the

proper implementation of this Act;

SECTION 5. Qualification of Student-borrowers. Any Filipno citizen who
possesses the qualifications herein provided are eligible to draw a loan under the “Study

Now Pay Later’ program:


1. Not more than thirty (30) years old at the time of application for the
loan,

2. Must be enrolled in or must have complied with all the enrolment and
admission requirements of the college or university he/she intends to
enrol in;

3. Must have a rating of 75% or above in the National Secondary
Achievement Test (NSAT) or other equivalent tests;

4. The parents or guardians have a gross income of not more than
P180,000.00;

5. Must not be enjoying any other scholarship or study grant;

6. Must not have been convicted of any crime involving moral turpitude;

7. If the student-borrower is availing of a student loan for the second time
or oftener, he must sufficiently show that he/she has passed all his
subjects and have a weighted average of 2.5 or higher, or its
equivalent, in the semester immediately preceding his/her loan
application; and

8. Must have attended the orientation program called for the purpose.

SECTION 6. Coverage. Within five (5) years from effectivity of this Act, loans
granted to student-borrower shall be limited to technical vocational education and
training declared by the TESDA as priority. Thereafter, loans granted to student-

borrowers shall be made available to all technical and vocational education and


trainings, and all to degree courses in all institutions of higher learning. This Act shall

not cover post-graduate courses.

SECTION 7. Amount of Loan. The CHED and the TESDA shall determine the
maximum amount a student-borrower can avail under this Act, which may cover tuition
fees, and other educational expenses such as, but not limited to books, subsistence,
board and lodging. Provided, loans for tuition fees shall in no case fall below seventy-
five percent (75%). Provided further, loans granted for payment of tuition fees shall be

directly payable to the school concerned

SECTION 8. Terms, Interest Rates, Repayment and Others. The CHED and
the TESDA shall determine the interest rate, terms of payment, and other conditions of
payment of the loans under their respective control and supervision, subject to the
following

4. Voluntary repayments may start anytime the student borrower wants to pay;

2. Interest rate shall in no case be more than six (6) percent per annum,

3. Loan repayments shall commence not earlier than two (2) years after the
student-borrower graduates from the course he/she took and is able to land a
job;

4. Loans granted to student-borrowers shall be payable in one hundred twenty
(120) equal monthiy instalments or ten (10) years. Provided, loan
amortizations shall in no case be more than thirty percent (30%) of the

student-borrower’s monthly salary. Provided further, the CHED and the


TESDA are hereby authorized to extend the term in case the monthly salary
of the student-borrower is inadequate to pay his loan within the ten (10) year
period taking into consideration the thirty percent (30%) monthly amortization
cap. Provided finally, the student-borrower shall not be made to pay monthly
amortizations while he/she is unemployed;

. For purposes of this Act, the CHED and the TESDA shall enter into an
agreement with the SSS and GSIS for it to act as collection agent. The
employer of the student-borrower is hereby authorized to automatically
deduct such instalments due from the student-borrower’s salary and remit the
same to the respective accounts the GSIS or SSS;

To ensure continued viability of this SNPL Program, the CHED and TESDA
through the program’s Implementing Rules and Regulations to be issued
subsequent hereto, and through stipulations in the Student Loan Agreement
may require the student-borrower not to depart from the Philippines and work
aboard until his/her loan has been fully settled. The student-borrower shall be
required to submit an undertaking of such fact as a requirement for the
release of the proceeds of the student loan. Provided, the foregoing
notwithstanding, should the student-borrower still desire to work aboard,
he/she shall then be required to fully settle his/her outstanding obligations for

loans granted in this Act;

The Department of Labor is hereby mandated to adopt pro-active policies,
plans and programs to assist the student-borrower to find employment from

within the Philippines.


SECTION 9. Implementing Rules and Regulations. The CHED and TESDA
respectively, shall within six (6) months from effectivity of this Act issue the necessary

rules and regulations to carry out the provisions hereof.

SECTION 10. Appropriations. The amount of One Billion Pesos
(P1,000,000,000.00) out of funds in the National Treasury not other wise earmarked for
any other purpose are hereby appropriated to carry-out the provisions of this Act.
Thereafter, such sum necessary for its continued operation shall be included in the

annual General Appropriations Act.

SECTION 11. Separability Clause. If any provision of this Act is held invalid or
unconstitutional, other provisions not affected thereby shall continue to be in full force

and effect.

SECTION 12. Repealing Clause. All laws, decrees, and/or executive orders

inconsistent with this Act are hereby repealed and/or modified accordingly.

SECTION 13. Effectivity. This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,