Gov’t projects $1.2 million deficit in scholarship funds

Several government scholars may not be receiving financial aid during this schoolyear as the Tenorio administration projected at least $1.2 million deficit in its scholarship funds in light of the continuous economic difficulties besetting the island.

To deal with the serious problem, lawmakers are looking at a financing scheme that would allow the government to guarantee bank loans to pay for the college education of its scholars.

The study-now-pay-later plan was one of the recommendations discussed during a meeting yesterday between the House Committee on Health, Education and Welfare and finance officials as well as the scholarship office.

The discussion was intended to seek solutions to pestering problems facing the government scholarship program, which funding for the next fiscal year has been cut nearly half — from $4 million in FY 1999 to $2.3 million.

A bill is expected to be drafted by the committee to put in place the proposal by January next year and assist students for the spring semester, according to HEW chair Rep. Heinz S. Hofschneider.

Under the plan, students availing the loan from any participating commercial banks will not repay it until after earning a diploma, while the government will shoulder the interest payment.

“The government will be paying interest first and after graduation, they will take over the balance,” Hofschneider told reporters.

He said this scheme will help the government save at least $2 million each year from its scholarship funds as majority of the financial grants will be converted into loans.

These savings can be used to finance nursing and teacher’s programs of the government to develop its human resources. “We need to stretch our dollars,” the representative said.

While the scholarship office has provided promissory note to some students who expressed interest to avail these educational loans, Hofschneider said the Legislature needs to pass a law first to set up this system.

He also urged the students to exhaust other means of financial aid, such as Pell grants provided by the federal government, before they ask for help from the Commonwealth.

Serious deficit: Hofschneider’s proposal comes amid serious cash-flow problems facing the CNMI which have forced the Tenorio administration to overhaul its scholarship policy.

During yesterday’s meeting, finance officials said the present funding level is short of the $1.4 million needed to provide assistance to students enrolled this fall semester.

Only about $179,000 is currently available for use by more than 1,000 students from both the Northern Marianas College and off-island universities.

Scholars under government statutes, like the teacher’s scholarship, will need $2 million for the entire schoolyear which is already 90 percent of the entire proposed appropriation to the scholarship office for FY 2000.

Roman Benavente, a member of the scholarship board, called on reforming the current program to select students from low-income bracket so as to distribute the money equally among those who need them most.

“We are trying to find a way to satisfy students their needs, but not 100 percent of it. That’s a fallacy,” Hofschneider told the meeting. “It’s not the obligation of the government to pay 100 percent of the education costs.”

Vice Speaker Jesus T. Attao, however, backed moves to grandfather students who are affected by a recent law that peg the amount of grants to $15,000.

This law is making it difficult for 14 students, most of them taking law and medicine courses in the mainland.

Mike Sablan, special advisor for finance and budget, expressed hope the loan program could help the government address these problems. “We will proceed until we get the program in place and supplement the grants,” he said at the meeting.