Students slow to take up loans under gov't-backed program
But with competition in the retail banking market heating up, banks are happy to lay hands on any new customers.
Although it was initially believed that about 100,000 students would take part in the program, which was approved in May, only 7,000 students have applied so far.
The lackluster demand has led to an extension of the application deadline to Nov. 25 from Nov. 16, said Dariusz Matysek, a spokesman with Bank Gospodarstwa Krajowego (BGK), which is managing the Student Credit Fund. "We hope that the number of applications will increase," he added.
But many students may be hanging back because the lending scheme isn't clearly defined yet. To qualify for a loan, a student must be under 25 and meet family income requirements, which have yet to be determined. This criteria won't be established until December and will be based on the applications submitted.
"I guess this is the reason why the majority of students decided to wait and see," said Jerzy Ryzlak, director of the credit system department at Kredyt Bank PBI. "They don't want to go through the whole paper procedure not being absolutely sure they would qualify."
The procedure involves the submission of documents from government agencies and universities, as well as a guarantee from a student's parents.
"The good news is that it's only a one-time procedure," Ryzlak said. During the program, a borrower will have to show twice a year that he or she is still a student.
Despite the poor response to the program, banks are increasingly seeing college students as an important new market. Nine banks agreed with BGK to distribute loans under the program: Gornoslaski Bank Gospodarczy, Bank Przemyslowo-Handlowy (BPH), Wielkopolski Bank Kredytowy (WBK), Bank Ochrony Srodowiska (BOS), Kredyt Bank PBI, Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), Bank Gospodarki Zywnosciowej (BGZ), Pekao and Bank Zachodni.
Until now, only PKO and BPH have offered credits targeted at students. By the end of September, PKO had lent zl. 16.2 million ($4.6 million) to more than 5,000 students. BPH introduced student loans two years ago and has given a few hundred loans for educational purposes.
Under the new government-backed program, banks are forging a closer cooperation with universities to grab a bigger share of the increasingly competitive retail banking market. For example, Kredyt Bank PBI made presentations on the new loan scheme at 52 universities around Poland. The bank has also developed a special account package "Pakiet Student," which consists of a current account, consumer and preferential loans and a Visa Electron card.
"Under this program we don't see students," said Kredyt Bank's Ryzlak. "We see our future customers."
The increased attention on students is desperately needed, students said. Even if the new loan program was fully taken up, it would only provide financing for a small portion of the 1.2 million students in higher education institutions.
"It's only one piece of the whole puzzle," said Miroslaw Mularczyk, president of the student government at Politechnika Warszawska. "It should be supplemented by grants provided by companies."
The idea behind the new loan program was to support students who are financially needy. The loans offered under the program carry an interest rate that is half the National Bank of Poland's (NBP) discount rate. (This rate is currently 20%.) The remainder of the interest is paid for through a government fund that is managed by BGK. For the 1998-1999 school year, the fund has received zl. 31.5 million ($9 million).
Although it was initially believed that about 100,000 students would take part in the program, which was approved in May, only 7,000 students have applied so far.
The lackluster demand has led to an extension of the application deadline to Nov. 25 from Nov. 16, said Dariusz Matysek, a spokesman with Bank Gospodarstwa Krajowego (BGK), which is managing the Student Credit Fund. "We hope that the number of applications will increase," he added.
But many students may be hanging back because the lending scheme isn't clearly defined yet. To qualify for a loan, a student must be under 25 and meet family income requirements, which have yet to be determined. This criteria won't be established until December and will be based on the applications submitted.
"I guess this is the reason why the majority of students decided to wait and see," said Jerzy Ryzlak, director of the credit system department at Kredyt Bank PBI. "They don't want to go through the whole paper procedure not being absolutely sure they would qualify."
The procedure involves the submission of documents from government agencies and universities, as well as a guarantee from a student's parents.
"The good news is that it's only a one-time procedure," Ryzlak said. During the program, a borrower will have to show twice a year that he or she is still a student.
Despite the poor response to the program, banks are increasingly seeing college students as an important new market. Nine banks agreed with BGK to distribute loans under the program: Gornoslaski Bank Gospodarczy, Bank Przemyslowo-Handlowy (BPH), Wielkopolski Bank Kredytowy (WBK), Bank Ochrony Srodowiska (BOS), Kredyt Bank PBI, Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), Bank Gospodarki Zywnosciowej (BGZ), Pekao and Bank Zachodni.
Until now, only PKO and BPH have offered credits targeted at students. By the end of September, PKO had lent zl. 16.2 million ($4.6 million) to more than 5,000 students. BPH introduced student loans two years ago and has given a few hundred loans for educational purposes.
Under the new government-backed program, banks are forging a closer cooperation with universities to grab a bigger share of the increasingly competitive retail banking market. For example, Kredyt Bank PBI made presentations on the new loan scheme at 52 universities around Poland. The bank has also developed a special account package "Pakiet Student," which consists of a current account, consumer and preferential loans and a Visa Electron card.
"Under this program we don't see students," said Kredyt Bank's Ryzlak. "We see our future customers."
The increased attention on students is desperately needed, students said. Even if the new loan program was fully taken up, it would only provide financing for a small portion of the 1.2 million students in higher education institutions.
"It's only one piece of the whole puzzle," said Miroslaw Mularczyk, president of the student government at Politechnika Warszawska. "It should be supplemented by grants provided by companies."
The idea behind the new loan program was to support students who are financially needy. The loans offered under the program carry an interest rate that is half the National Bank of Poland's (NBP) discount rate. (This rate is currently 20%.) The remainder of the interest is paid for through a government fund that is managed by BGK. For the 1998-1999 school year, the fund has received zl. 31.5 million ($9 million).
