Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

5180

HOUSE BILL NO.

Introduced by Representative Florencio Gabriel G. Noel

EXPLANATORY NOTE
Article 14, Section 1 of the 1987 Constitution provides:

“The State shall 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.”

Likewise, Article 14, Section (3) further states:

“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.”

comitant to the development and progress of the nation and
zation. Notwithstanding the state’s collective effort to make
education accessible to all Filipinos, with the limited scope and coverage of existing
state scholarships and grants, the results is yet to be desired.

This proposed bill seeks to promote quality education that is accessible for
everyone by encouraging banks and government financial institutions to alot portion
of their loanable funds for school loans. This will help establish a student assistance
program for the eligible students to obtain post-secondary technical-vocational
certificates or diplomas, and college and post-graduate degrees, which shall be repaid
in installments after the student graduates. Participating banks, in turn, are entitled to
incentives under the bill. This is envisioned to complement the existing financial
assistance programs being implemented by the government, to help meet our students’
needs.

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

FLORENCIO GABRIEL G. NOEL.


Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 5180

Introduced by Representative Florencio Gabriel G. Noel

AN ACT
ESTABLISHING A VOLUNTARY STUDENT LOAN PROGRAM BY PRIVATE
BANKS, PROVIDING INCENTIVES THEREFOR 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 “Voluntary Student
Loan Program Act”.

SEC. 2. Declaration of Policy. 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 goverment financial institutions to
lend money to eligible students to be repaid in installments after the student graduates
or leaves the educational institution.

SEC. 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
(HED) and has been accepted for enrollment in a postsecondary TVI as a
non-degree student or in an HEI as an undergraduate or post-graduate
student.

(©) 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 Institution (HEI) refers to an educational institution that is
legally authorized to offer a program of education leading to the conferment
ofa degree.

(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 non-degree
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).

(i) 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 non-degree 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”.

SEC. 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 banks participating in the program may be entitled to
avail themselves of the incentives under this Act by the registration of their student
Joan 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.

SEC. 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.

SEC. 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.

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

(1) General entry requirements:
a. Must bea Filipino citizen;
b. Currently enrolled or intends to enroll or re-enroll in any of the priority
courses to be determined by the CHED or TESDA;
c. Has parents or guardians who are GSIS or SSS members or SSS prior


registrants; and
d. Does not currently enjoy any scholarship or study grant,
(2) Additional specific entry requirement for priority eligible student:

. 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

f. 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; and

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

SEC. 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;

(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 HEI 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
chosen TVI or HEI which shall include, among others, the cost of books,
food, board, lodging and transportation expenses;

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

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

SEC. 9. Loan Disbursement. Upon approval of the loan application, the loan
shall be disbursed in tranches 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 HEL. The tuition
and miscellaneous fees payable to the educational institution shall be disbursed or be
made payable directly to the TVI or HEL

SEC. 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.

SEC. 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 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.

SEC. 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 loan, together with the interest
thereon, in equal installments or when the borrower so requests, in
graduated periodic installments, payable quarterly, bimonthly or monthly at
the option of the student-borrower, over a period beginning not earlier than
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 than twenty-four (24) months upon the request of the
student-borrower,

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

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

SEC. 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.

SEC. 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

SEC. 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.

SEC. 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.


SEC. 17. Effectivity Clause. This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.
Approved,