New scholarship program underway

The Senate has taken the initiative in laying down the groundwork for a new scholarship program which will reduce government subsidy while providing incentives to local students who eventually earn a college degree.

Legislation proposing the mechanism is expected to be introduced by Senate President Paul A. Manglona when the upper house holds its first regular session within the next few weeks in order to fast-track its implementation.

Senate Vice President Thomas P. Villagomez met last week with Dan Nielsen, the governor’s special education consultant, and Hilaria K. Santos, administrator of the Scholarship’s Office, to get update on the draft of the proposal which is being drawn up by the executive branch.

The proposed program will be put in place of the existing scholarship system which has come under fire in recent years amid funding shortfall as a result of the financial crisis confronting the island government.

“I don’t think we will be looking for an increase in the appropriation for the Scholarship’s Office per se, because we can technically reduce the amount that is going to be given to the students,” said Mr. Villagomez in an interview over the weekend.

He stressed that the traditional financial assistance granted by the CNMI to students on and off island will be cut to allow less subsidy coming from the local coffers. Instead, the government will guarantee educational loans secured from banks and other financial institutions by these students.

Through this scheme, Mr. Villagomez noted that a student can avail a maximum amount of $40,000 to finance his or her college education per year, more than the $15,000 ceiling in the total grants given by the government.

“The good thing about the whole concept is that when you finish school, that’s when you get the benefit of the financial assistance because we are going to be cutting down the amount on how much you are going to shell out to pay back your loan,” said the senator.

Mr. Villagomez, however, emphasized this benefit of reducing the loan amount will only be extended to students who are able to finish school and earn a college degree. “It’s an incentive to finish the school and hopefully come back here and get a job,” he pointed out.

For those who fail to get a college diploma, the government will impose time limits during which they can either return to school to complete their education or pay back the loan so that the CNMI will not be shortchanged, according to the senator.

To ensure that such loans will have low interest rates, the government will guarantee the credit and assume the debt when there is default. In addition, certain amount of the fiscal budget will also be set aside to pay the annual interest rates.

In recent weeks, Mr. Nielsen has underscored the need to implement such a program in light of the continuous economic hardships facing the Commonwealth and has asked support of the education sector as well as lawmakers.

The financial aid program has drawn controversy for the past two years after its budget was cut and the amount of grants capped in efforts to help both students studying in the mainland and those attending the Northern Marianas College.