Is Compounding Interest on Student Loans Unfair to the Unemployed?
Haruna Iddrisu, the Minister for Education, has sparked a crucial debate on student loan interest rates. On November 3, 2025, he addressed the Public Accounts Committee, advocating for a review of the interest rate structure of the Students Loan Trust Fund (SLTF).
The issue? Many graduates are burdened with growing loan repayments due to compounding interest, despite facing unemployment challenges. Mr. Iddrisu believes this system lacks fairness, especially for those without jobs after graduation. But here's where it gets controversial—how do we balance compassion with financial sustainability?
The minister announced an expansion of the SLTF's reach, now including students at the Ghana School of Law. This is a significant step towards supporting legal education. However, the focus remains on ensuring equitable repayment terms. Iddrisu suggests a shift from compound to simple interest, making it more manageable for graduates.
"A student's loan shouldn't snowball due to unemployment." Iddrisu's statement highlights the dilemma: ensuring fair repayment without compromising the fund's income. The proposed review aims to strike this balance, potentially benefiting graduates while maintaining the fund's health.
The Students Loan Trust Fund, a vital support system for tertiary education, is set to receive a substantial funding increase in 2026. This boost will expand access to higher education, but the interest rate review could be a game-changer. The current 12% annual interest rate may evolve into a simpler, fairer model, providing relief to struggling graduates.
But is this review enough? The minister's comments ignite a discussion on the fairness of student loan systems. What's your take on this? Should interest rates be adjusted based on graduates' employment status? Share your thoughts in the comments, and let's explore this complex topic further.
