Gov't approves student loan plan
But the devil is in the details, and those have yet to be worked out, bankers said.
Under the student loan program, approved by the government last week, credits of up to zl. 500 per month would become available this October for students under the age of 25. Loan repayments would not have to be made until one year after a student has completed his or her studies.
During that grace period, the government is pledging to cover interest payments. In addition, the state would subsidize a part of the payment plan for life of the loan. This year's budget allots zl. 31 million ($9.1 million) for the program. The amount is to increase to zl. 100 million ($29.4 million) in 1999.
"Banks have been waiting for such a signal from the government," said Beata Wojcik, a spokeswoman for Bank Pekao. "Such credits can't be too expensive."
So far only two banks have offered credits targeted at student consumers - Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP) and Bank Przemyslowo-Handlowy (BPH).
Both introduced the credits last year and PKO, by this March, lent zl. 15.2 million to more than 5,200 students.
"We call them educational credits because we offer them not only to university, but also to high school students," said Janusz Ostaszewski, a PKO spokesman.
BPH, which also provides educational credits, offers the loans for any educational purpose, such as foreign language classes for adults.
Interest rates for the loans are similar to conventional consumer credit lines, although the banks offer students the possibility of deferring repayment.
But now, with the government promising to subsidize student loans, more banks are likely to venture toward classrooms with a variety of education-related products.
"It might be a very good business," said Wojciech Kaczorowski, a spokesman for BIG Bank Gdanski. "Banks help young people to complete their studies, to find a good job and to become our good customers."
But a sticking point may be how the loan program is administered.
The government's plan calls for the loan program to be serviced by Bank Gospodarstwa Krajowego (BGK), a state-owned institution created to service extra-budgetary funds such as housing and credit-guarantee funds. But this approach has not always worked well for other programs.
"BGK has no network, so they will have to do it through other banks," said PKO's Ostaszewski. "Now the question is what will be their commission."
If commissions are too high, that would likely stifle interest by cost-conscious consumers. For example, in previous projects, such as a housing financing project implemented by Bud-Bank, the commission structure made the loans prohibitively expensive, Ostaszewski said.
"It's too early to discuss the details," said Dariusz Matysek, a spokesman for BGK. "If the bank is asked by the government to do it, we will work out the best solutions."
He added that in the area of corporate credit guarantees the bank has agreements with 37 banks and a similar arrangement is likely to be made for student credits.
Under the student loan program, approved by the government last week, credits of up to zl. 500 per month would become available this October for students under the age of 25. Loan repayments would not have to be made until one year after a student has completed his or her studies.
During that grace period, the government is pledging to cover interest payments. In addition, the state would subsidize a part of the payment plan for life of the loan. This year's budget allots zl. 31 million ($9.1 million) for the program. The amount is to increase to zl. 100 million ($29.4 million) in 1999.
"Banks have been waiting for such a signal from the government," said Beata Wojcik, a spokeswoman for Bank Pekao. "Such credits can't be too expensive."
So far only two banks have offered credits targeted at student consumers - Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP) and Bank Przemyslowo-Handlowy (BPH).
Both introduced the credits last year and PKO, by this March, lent zl. 15.2 million to more than 5,200 students.
"We call them educational credits because we offer them not only to university, but also to high school students," said Janusz Ostaszewski, a PKO spokesman.
BPH, which also provides educational credits, offers the loans for any educational purpose, such as foreign language classes for adults.
Interest rates for the loans are similar to conventional consumer credit lines, although the banks offer students the possibility of deferring repayment.
But now, with the government promising to subsidize student loans, more banks are likely to venture toward classrooms with a variety of education-related products.
"It might be a very good business," said Wojciech Kaczorowski, a spokesman for BIG Bank Gdanski. "Banks help young people to complete their studies, to find a good job and to become our good customers."
But a sticking point may be how the loan program is administered.
The government's plan calls for the loan program to be serviced by Bank Gospodarstwa Krajowego (BGK), a state-owned institution created to service extra-budgetary funds such as housing and credit-guarantee funds. But this approach has not always worked well for other programs.
"BGK has no network, so they will have to do it through other banks," said PKO's Ostaszewski. "Now the question is what will be their commission."
If commissions are too high, that would likely stifle interest by cost-conscious consumers. For example, in previous projects, such as a housing financing project implemented by Bud-Bank, the commission structure made the loans prohibitively expensive, Ostaszewski said.
"It's too early to discuss the details," said Dariusz Matysek, a spokesman for BGK. "If the bank is asked by the government to do it, we will work out the best solutions."
He added that in the area of corporate credit guarantees the bank has agreements with 37 banks and a similar arrangement is likely to be made for student credits.
