Private Schools Rake Profits from Arroyo’s Student Loan Program (Last of two parts)

How can a student loan program end up being profitable for a private school? Answer: When it is called PGMA-HELP.


The name itself is a dead giveaway of what it seeks to do. What it actually does, however, is something else.

PGMA-HELP stands for President Gloria Macapagal-Arroyo Higher Education Loan Program and it has a total funding of P215 million (($4.29 million, based on an exchange rate of P50.105 per US dollar). Established last May 8, it is the government’s new student loan program being implemented in selected private colleges and universities.

At present, the initial 2,593 grantees do not just have to contend with delayed fund releases typical of the government bureaucracy. According to the National Union of Students of the Philippines (NUSP), the grantees also have to deal with the fact that school owners are actually profiting from the program that, ironically, was meant to help them.

PGMA-HELP mechanics

The Commission on Higher Education (CHEd) delegated to about 110 private colleges and universities the responsibility of implementing and managing the PGMA-HELP. The partnership between the schools and CHEd was sealed through a memorandum of agreement.

The partner schools were provided either P1 million or P2 million ($19,958.09 or $39,916.18) each, depending on their enrollment records. In administering the program, the schools were then directed to provide a discounted rate of tuition to loan borrowers.

The partner schools were allowed to impose a six-percent annual interest rate per student borrower. The CHEd also ordered the partner-schools to use the PGMA-HELP funds as revolving funds for the one-year program and gave them the discretion to include in the revolving funds their collections from the interest.

The Catholic Educational Association of the Philippines (CEAP); Philippine Association of Colleges and Universities (PACU); Philippine Association of Private Schools, Colleges and Universities (PAPSCU); and the Association of Christian Schools, Colleges and Universities (ACSPU) helped in identifying private schools that would implement the PGMA-HELP.

Student loans for profit

A status report obtained by Bulatlat showed that around P144 million ($2.87 million) has been released from the total P215-million ($4.29-million) allocation for PGMA-HELP.

The funds are part of the government’s P900-million ($17.96-million) financial assistance program this year, of which P500 million ($9.98 million) has been set aside for the regular programs and P185 million ($3.69 million) for the Emergency Financial Assistance for Students (EFAST).

For the NUSP, the PGMA-HELP funds could have been used to help state universities and colleges (SUCs). If examined closely, the NUSP argued that this kind of government-led program is only “palliative” and even allows schools to profit even more by collecting interest from the loans.

“What is more painful for students is that they pay for loans (that should be given to them as subsidy), as in the case of PGMA-HELP which uses the fund from the taxes of the people” the NUSP said in a statement. Bulatlat

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