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Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

SEVENTEENTH CONGRESS PECISTR ITI¢
First Regular Session BALLS IND in

House Bill No. 2819

Introduced by Representatives
Estrellita B. Suansing and Horacio P. S

EXPLANATORY NOTE

It is the constitutional mandate of the State to give priority to education in order to
foster patriotism and nationalism, accelerate social progress, and promote total human
liberation and development. The State has the duty to protect and promote the right of all
citizens to quality education at all levels and ensure universal access to such education.

The private sector, particularly banks and government financial institutions, play a
vital role in the national growth by providing an environment conducive to the sustained
development of the national economy.

This bill seeks to promote quality education that is accessible for everyone by
encouraging the private sector's participation, particularly banks and government financial
institutions, in establishing a student assistance program where eligible students are
afforded an opportunity to attend vocational or technical institutions, or institutions of higher
education, by making available to them fund procured through loans, to cover the cost of
tuition fees and other living expenses, payable in instalments after graduation

This bill has been filed during the 16" Congress and subsequently approved on Third
Reading, In view of the foregping, immediate passage of this bill is earnestly sought.

ELLITA B. SUANSIHG HORACIO, F ‘SUANSING, JR.
1® District, Nueva Ecij 2" District, Sultan Kudarat



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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 2819

Introduced by Representatives
Estrellita B. Suansing and Horacio P. Suansing, Jr.

AN ACT
ESTABLISHING A VOLUNTARY STUDENT LOAN PROGRAM BY BANKS AND
GOVERNMENT FINANCIAL INSTITUTIONS

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 “Voluntary Student Loan
Program Act.”

SECTION 2. Declaration of Policies. — It shall be a policy objective of the State to
assist eligible students to obtain post-secondary technical-vocational certificates or diplomas
from technical-vocational institutes and college and post-graduate degrees from higher
education institutions by encouraging banks and government financial institutions to lend
money to eligible students to be repaid in installments after the student graduates or leaves
the educational institution

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

A) CHED refers to the Commission on Higher Education;

B) Eligible student refers to a student who meets the admission requirements of a
technical-vocational institute (TVI) or higher education institution (HE!) and has been
accepted for enrollment in a post-secondary TVI as a nondegree student or in an HEI
as an undergraduate or post-graduate student;

C) Higher education refers to college and graduate education or training in an
educational program leading to a degree offered in HEIs. It is also known as tertiary
education;

D) Higher education institute (HEI) refers to an educational institution that is legally
authorized to offer a program of education leading to the conferment of a degree;


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E) Lender refers to a private bank which provides loans to student-borrowers pursuant
to this Act;

F) Post-secondary education refers to education and training in nondegree vocational
and technical courses offered in post-secondary TVIs;

G) Priority eligible student refers to an eligible student who is an immediate member of a
family where no other immediate member of such family is enrolled in or has
completed post-secondary or higher education at the time of the loan application;

H) Private banks refer to commercial, rural, thrift, cooperative and other types of banks
where the majority of the capital stocks are owned and operated by the private sector
and which are registered and directly supervised by the Bangko Sentral ng Pilipinas
(BSP);

|) Student-borrower refers to an eligible student with a loan under this Act;

J) Technical-vocational institute refers to a technical-vocational education and training
institution accredited by the Technical Education and Skills Development Authority
(TESDA) which offers any nondegree program at the post-secondary educational
level oriented towards skills proficiency leading to a certificate or diploma in
preparation for a particular occupation or group of middle-level occupations;

K) TESDA refers to the Technical Education and Skills Development Authority as
established under Republic Act No. 7796, otherwise known as the “TESDA Act of
1994."

SECTION 4. Registration of Student Loan Program Under this Act. — Private banks
participating in the student loan program may allot a portion of their loanable funds for loans
to eligible students. Such bank participating in the program may be entitled to avail
themselves of the incentives under this Act by the registration of their student loan program
with the BSP.

In addition, the BSP shall provide other incentives which may be nonmonetary to
private banks participating in the voluntary student loan program under this Act.

SECTION 5. Loan Coverage. - The loan may either cover the entire or part of the
cost of the program offered by the TVI or HEI including, but not limited to, tuition and
miscellaneous fees: Provided, That adjustments shall be made in case of increase in tuition
and miscellaneous fees. It shall likewise include an amount for the cost of attendance,
covering necessary expenses of the student for books, food, transportation, board and
lodging and a reasonable allowance for projects and other school requirements.


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SECTION 6. Student-Borrower Number. — For proper implementation of this Act and
to better facilitate the collection of the loan, the Social Security System (SSS) and the
Government Service Insurance System (GSIS) shall issue, upon application, an SSS or
GSIS number to the student-borrower. The number so issued shall serve as the permanent
SSS or GSIS number of the student-borrower in case of future employment with the private
or government sector.

SECTION 7. Qualification Requirements of Student-Borrower. - Any student-
borrower eligible under this Act shall have the following entry requirements:

(a) General entry requirements:
(1) Must be a Filipino citizen;

(2) Currently enrolled or intends to enroll or re-enroll in any of the priority courses
to be determined by the CHED or TESDA;

(3) Has parents or guardians who are GSIS or SSS members or SSS prior
registrants; and

(4) Does not currently enjoy any scholarship or study grant;
(b) Additional specific entry requirement for priority eligible student:

(1) Barangay certification that no other immediate family member of the student
is enrolled or has completed a post-secondary higher education at the time of
the loan application; or

(2) Notarized self-certification that no other immediate family member of the
student is enrolled or has completed a post-secondary higher education at the
time of the loan application

(c) Other requirements as may be determined by banks.

SECTION 8. Loan Application. - Any eligible student-borrower may file the loan
application with a participating private bank. A loan application shall include, among others.

(a) The student SSS or GSIS number;

(b) The taxpayer's identification number (TIN) of the student, in case one is
employed;


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(c) The list of expenses which shall include the total tuition fees for the entire period
of attendance to complete the student's course or degree, with a necessary
allowance for any increase that the TVI or HE! may rightfully make and the other
miscellaneous expenses certified by the educational institution;

(d) A reasonable approximation of the cost of attendance of the student in the TVI or
HEI which shall include, among others, the cost of books, food, board, lodging
and transportation expenses;

(e) A statement of the student-borrower on the preferred employer in the future,
whether with the private or public sector; and

(f) All other requirements that the participating private bank may impose for the
proper identification of the student.

SECTION 9. Loan Disbursement. - Upon approval of the loan application, the loan
shall be disbursed in trances every semester or trimester, or any other term of attendance,
depending on the academic calendar adopted by the TVI or HEI. Any succeeding tranche
shall be disbursed on the condition that the student-borrower completes the term previously
enrolled in as certified by the TVI or HEI. The tuition and miscellaneous fees payable to the
education institution shall be disbursed or be made payable directly to the TVI or HEI

SECTION 10. Withholding of Second or Subsequent Disbursement. — A lender who
receives information that the student-borrower has ceased to be enrolled before the
disbursement of the second or any succeeding installment shall withhold such disbursement.
‘Any disbursement which is so withheld shall be credited to the student-borrower's loan and
treated as a prepayment thereon.

SECTION 11. Interest Rate and the Five Percent (5%) Additional Interest as
Allowable Deduction. — For any loan procured under this Act, lenders shall charge an
interest based on the prevailing ninety-one (91)-day Treasury Bill rate at the time of release
of the loan to be paid by the student-borrower and an additional interest rate of three percent
(3%) and in case of loans to priority eligible students an additional interest of five percent
(5%), which shall not be payable by the student but may be claimed by the lender as a
deduction from gross income: Provided, That the additional five percent (5%) interest shall
be allowed as a deduction from gross income for the same taxable year that the additional
interest is due: Provided, further, That the total amount of the additional interest and the
claimed tax deduction shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code, as amended.


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SECTION 12. Terms and Conditions of Loans. — Any loan agreement shall:

(a) Be evidenced by a note or other written instrument which provides for repayment
of the principal amount of the load, together with the interest thereon, in equal
installments or when the borrower so requests, in graduated periodic
installments, payable quarterly, bi-monthly or monthly at the option of the student-
borrower, over a period beginning not earlier that twenty-four (24) months after
the student-borrower ceases attending the TVI or HEI, and ending eight (8) years
after such date, except that such period may begin earlier that twenty-four (24)
months upon the request of the student-borrower;

(b) Include a provision for acceleration of repayment of the whole, or in any part, of
‘such loan, at the option of the student; and

(c) Include a provision for the preferential employment of the student-borrower in
private banks or in the government upon graduation.

SECTION 13. Collection. — A lender shall file a request with the GSIS or SSS to
collect the repayment of the loan through its system of salary deduction and withholding. It
may likewise enter into an arrangement with the Philippine Overseas Employment
Administration (POEA) and the Overseas Workers Welfare Administration (OWWA) to
ensure collection from the student-borrower seeking employment abroad.

SECTION 14. Program Administration. — An interagency team composed of the
CHED, TESDA, BSP, the Bankers Association of the Philippines (BAP), the Chamber of
Thrift Banks (CTB), the Credit Information Corporation (CIC) and the Rural Bankers
Association of the Philippines (RBAP) shall be jointly responsible for policy guidance and
direction, monitoring and evaluation of the student assistance program under this Act. The
CHED and the TESDA shall act as chair and co-chair, respectively, of the said team.

SECTION 15. Implementing Rules and Regulations. - The CHED, TESDA, the
Department of Finance (DOF) and the BSP, in consultation with the SSS, GSIS, the Bureau
of Internal Revenue (BIR), the National Bureau of Investigation (NBI), the POEA, CIC, the
Coordinating Council of Private Educational Associations (COCOPEA) and the Philippine
Association of State Universities and Colleges (PASUC), shall promulgate such rules and
regulations necessary for the proper implementation of this Act within ninety (90) days from
the effectivity of this Act.


SECTION 16. Separability Clause. - If any provision of this Act is declared
unconstitutional or invalid, the other sections or provisions not otherwise affected shall

continue to be in full force and effect.

SECTION 17. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

publication in at least two (2) newspapers of general circulation.

Approved,