House OKs tax provision to ease payment of student loans

MANILA, Philippines - The House committee on ways and means has approved a tax provision in the proposed Student Loan Program Act aimed at helping poor but deserving students finish their college and graduate degrees through loan programs.

Davao City Rep. Isidro Ungab, committee chairman, said the panel’s support for the measure is “a big victory for students who want to avail of loan programs to complete their college education.”

Section 10 of the unnumbered substitute bill to House Bill 1876 provides that “for any loan procured under the Student Loan Program Act, lenders shall charge an interest based on the prevailing 91-day Treasury Bill rate at the time of release of the loan to be paid by the student borrower.”

The loans are exempted from payment of documentary tax, Ungab said.

The committee on higher and technical education chaired by Aurora Rep. Juan Edgardo Angara earlier approved the bill.

Cagayan de Oro Rep. Rufus Rodriguez, meanwhile, allayed fears of finance officials that the loan program could saddle many students with loans to pay after graduation just like their counterparts in the United States.

“The proposed student loan program has to be implemented otherwise many of our deserving students won’t be able to finish college simply because they don’t have the money while scholarship fund from the government is miniscule,” he said.

He said the Commission on Higher Education (CHED) is only giving P5,000 per year or P2,500 per semester “so how can our poor students finish college (with that amount)?”

The proposed Student Loan Program Act aims to assist eligible students to obtain post-secondary technical or vocational certificates or diplomas in tech/voc institutes and colleges, and graduate degrees in higher education institutions by encouraging banks and government financial institutions to lend money to students to be repaid in installments, at least 24 months after the student graduates or leaves the educational institution.

The loan covers the cost of the entire program offered by the higher educational institution or tech-voc institute, including, but not limited to, tuition and miscellaneous fees.

The substitute bill is authored by Representatives Angara, Roman Romulo (Pasig City), Emil Ong (Northern Samar), Mariano Piamonte Jr. (A Teacher party-list), Eulogio Magsaysay (AVE party-list), Pedro Romualdo (Camiguin), Eduardo Gullas (Cebu), Cesar Sarmiento (Catanduanes), Florencio Flores Jr. (Bukidnon), Raymond Democrito Mendoza (TUCP party-list), Sigfrido Tinga (Taguig City) and Pryde Henry Teves (Negros Oriental).