Educational Guarantee Fund Act


Published: 2000-08-23

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Educational Guarantee Fund Act
EDUCATIONAL GUARANTEE FUND [CH.46A – 1


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LRO 1/2006 STATUTE LAW OF THE BAHAMAS

EDUCATION GUARANTEE FUND
CHAPTER 46A

EDUCATIONAL GUARANTEE FUND

LIST OF AUTHORISED PAGES

1 – 11 LRO 1/2006



ARRANGEMENT OF SECTIONS

SECTION
1. Short title.
2. Interpretation.
3. Powers of Government to guarantee loans.
4. Minister to be a corporation sole.
5. Approval of lender.
6. Approved lender’s obligation.
7. Establishment of Education Committee.
8. Functions and powers of the Committee.
9. Directions.
10. Review.
11. Application for guaranteed loan.
12. Conditions for the grant of a guaranteed loan.
13. Interest rate.
14. Loan guarantee premium fee.
15. Interest payment.
16. Educational Fund.
17. Authorised limits on guaranteed loans.
18. Accounts and audit.
19. Annual report.
20. Borrower to repay to Government sums paid from the Fund.
21. Settlement of guaranteed loan.
22. Offences in respect of a guarantee.
23. Regulations.
24. Exemption from stamp duty.

SCHEDULE.

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LRO 1/2006 STATUTE LAW OF THE BAHAMAS

CHAPTER 46A
EDUCATIONAL GUARANTEE FUND

An Act to provide for the guarantee by the
Government of the Commonwealth of The Bahamas of
educational loans by financial institutions to students
wishing to study at approved institutions and for
purposes connected thereto.

[Assent 9th November, 2001]
[Commencement 23rd August, 2000]

1. This Act may be cited as the Educational
Guarantee Fund Act.

2. In this Act —
“approved institutions” means those institutions of

higher education approved by the Minister;
“approved lender” means —

(a) any domestic bank licensed under the
Banks and Trust Companies Regulation
Act;

(b) any other financial institution approved by
the Minister in accordance with section 5;

“borrower” means a person who is approved by the
Minister for the purposes of this Act and
includes the parent, guardian, or endorser of any
deed, agreement, promissory note or other
instrument issued by the approved lender as
security for a guaranteed loan;

“Committee” means the Education Committee estab-
lished by section 7;

“Education Policy” means the aims of the Minister
for educational development as published by
the Minister from time to time which may
include the efficient use and management of
resources and economic and social objectives in
The Bahamas;

“Fund” means the Educational Guarantee Fund
established under section 16;

“guaranteed loan” means a loan which complies with
sections 12, 13 and 14 of this Act; and

24 of 2001.

Short title.

Interpretation.

Ch. 316.

CH.46A – 4] EDUCATIONAL GUARANTEE FUND





STATUTE LAW OF THE BAHAMAS LRO 1/2006

“Minister” means the Minister responsible for
education, except in respect of sections 3, 5 and 6,
“Minister” means the Minister responsible for
Finance.

3. (1) The Government may in such manner and on
such terms and subject to such conditions as may be agreed
between it and an approved lender —

(a) guarantee the discharge by a borrower of his
obligations under any agreement (in this Act
referred to as a “guaranteed loan”) which may
be entered into by the borrower with an
approved lender in respect of any borrowing or
under any deed, agreement, promissory note or
other instrument issued by the approved lender
pursuant to any such agreement; and

(b) assume such other obligation as may be agreed
between the Minister and an approved lender in
relation to or pursuant to any such deed,
agreement, promissory note or other instrument.

(2) Section 17 of the Financial Administration and
Audit Act shall not apply to any guarantee made by the
Minister under subsection (1).

4. (1) The Minister shall, as respects the functions
assigned to him by or under this Act, be a corporation sole,
with power to enter into contracts, to sue and be sued and
to do all things necessary for the purposes of this Act.

(2) Upon and by virtue of the appointment of any
person to be the Minister charged with the responsibility
for the administration of this Act, the benefit and burden of
all deeds, contracts, securities and things in action vested in
his predecessor at the time of his predecessor ceasing to
hold office shall be transferred to and vested in and enure
to the person so appointed in the same manner as if he had
been contracted with instead of his predecessor and as if
his name had been inserted in all such deeds, contracts or
securities instead of the name of his predecessor.

5. (1) The Minister may, subject to such conditions
as the Minister sees fit, approve any financial institution as
an approved lender for the purposes of this Act.

Powers of
Government to
guarantee loans.

Ch. 359.

Minister to be a
corporation sole.

Approval of
lender.

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(2) The Minister may at any time terminate the
approval given to an approved lender under this section by
giving to the approved lender not less than six months’
written notice.

(3) No notice of termination under subsection (2)
shall affect the rights or obligations of any person under
any guarantee which is made or entered into before the
date on which such termination takes effect.

6. An approved lender shall submit bi-annual
declarations to the Minister commencing from the date on
which such loan would have been approved, in such form
as may be prescribed and otherwise required under this
Act, listing all guaranteed loans administered by it and
which are in arrears at the end of that period and advising
the Minister of the steps taken to recover such arrears.

7. (1) There is hereby established a Committee to
be known as the Education Committee.

(2) The Schedule shall have effect with respect to the
constitution and proceedings of the Education Committee.

8. (1) The functions of the Committee shall be —
(a) to advise the Minister on guaranteed loans;
(b) to issue, modify and revoke guaranteed loans in

a manner consistent with the Education Policy;
(c) to formulate and implement standards in relation

to the Education Policy; and
(d) to regulate, allocate and manage the use of the

resources available for tertiary education.
(2) In carrying out its functions the Committee shall

have the power —
(a) to require an applicant for a guaranteed loan to

provide such information as the Committee
determines necessary to process the application
for a guaranteed loan;

(b) to conduct a means test for each applicant;
(c) to publish information, reports and other docu-

ments; and
(d) to modify the conditions of a guaranteed loan.
(3) In exercising its functions and powers under this

Act, the Committee shall at all times act in a manner that is
timely, transparent, and non-discriminatory and consistent
with the objectives of the Education Policy.

Approved
lender’s
obligation.

Establishment of
Education
Committee.

Functions and
powers of the
Committee.

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STATUTE LAW OF THE BAHAMAS LRO 1/2006

9. The Minister may give written directions to the
Committee concerning the performance of its functions,
powers and duties, either generally or in relation to a
particular matter, and the Committee shall give effect to
those directions.

10. (1) A person aggrieved by a decision of the
Committee —

(a) refusing an application for a guaranteed loan;
(b) modifying a guaranteed loan;
(c) revoking a guaranteed loan,

has the right to have the decision reviewed by the Minister.
(2) An application for a review shall —
(a) be in writing;
(b) give particulars of the decision which the

aggrieved person wants to be reviewed;
(c) include any material or representations that the

aggrieved person wants to be taken into account;
and

(d) be delivered to the Minister within thirty days
after the aggrieved person is given notice of the
decision by the Committee.

(3) The Minister may confirm, vary or reverse the
decision under review.

11. Every application made under this Act for a
guaranteed loan shall be made to the Committee prior to
the student entering university or college or where the
student currently attends university or college before the
funds are required.

12. (1) A loan may be guaranteed under this Act if
all of the following conditions are satisfied —

(a) the student is a Bahamian citizen;
(b) the student is sixteen years of age or more;
(c) the loan is made to a person who is eighteen

years of age or more;
(d) the student has been accepted into an approved

institution;
(e) the purpose of such loan is to provide assistance

for university or college education or training at
an approved institution of higher education;

Directions.

Review.

Application for
guaranteed loan.

Conditions for
the grant of a
guaranteed loan.

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(f) the total amount of the loan does not exceed one
hundred thousand dollars, and that loan is not
advanced in amounts in excess of twenty
thousand dollars per annum; and

(g) the loan is made on terms that all money
borrowed shall be repaid within a period of
fifteen years from the completion or cessation of
studies.

(2) The Minister shall require that there is a valid
policy of insurance on the life of the borrower with an
insurance company registered under the Insurance Act for
such an amount as is sufficient to cover the full amount of
the loan.

(3) Where a borrower does not qualify for a policy
of insurance, the Minister may waive the requirement
referred to in subsection (2).

13. The rate of interest chargeable by an approved
lender and payable by a borrower on any guaranteed loan
under this Act shall be prime plus two per centum.

14. (1) Subject to subsection (3), the approved
lender shall pay a loan guarantee premium fee in respect of
each loan to the Minister before the loan is guaranteed
under this Act.

(2) The loan guarantee premium fee mentioned in
subsection (1) shall be in a sum equal to two per centum of
the amount guaranteed.

15. Notwithstanding any agreement that a borrower
and an approved lender may make with respect to the
interest payable under a guaranteed loan, the Minister may,
on the recommendation of the Committee, pay to the
approved lender, for a qualified student, one-half of the
interest due under that qualified student’s guaranteed loan,
until the student ceases or completes his studies.

16. (1) For the purposes of this Act, the Minister shall
establish a fund to be known as the Educational Guarantee
Fund (in this Act referred to as “the Fund”) into which —

(a) the Minister shall forthwith cause to be paid the
sum of one million dollars; and

Ch. 347.

Interest rate.

Loan guarantee
premium fee.

Interest payment.

Educational
Fund.

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STATUTE LAW OF THE BAHAMAS LRO 1/2006

(b) all loan guarantee premium fees received pur-
suant to section 14 shall be paid.

(2) The fulfilment of all obligations of the Govern-
ment under section 3 of this Act shall be guaranteed out of
the Consolidated Fund and accordingly, there shall be paid
into the Fund from time to time out of the Consolidated
Fund by warrant under the hand of the Minister of Finance,
such sums as may be necessary to increase the Fund to an
amount which will enable the Minister to discharge these
obligations.

(3) Whenever any sum is paid out of the Consolidated
Fund under subsection (2), the Minister shall prepare a
statement and lay it before the House of Assembly.

(4) Without prejudice to subsection (2), where the
Fund at the end of any financial year exceeds ten percent
of the total amount of guaranteed loans in force, the
Minister shall apply the surplus towards repaying to the
Consolidated Fund all sums paid therefrom into the Fund
in accordance with subsection (2).

(5) The Minister may from time to time invest any of
the liquid assets of the Fund in commercial bank deposits
and securities which are obligations of the Government, as
well as securities approved by the Governor-General.

(6) No payments shall be made out of the Fund except
such payments as are authorized to be made by this Act.

17. The aggregate amount of all borrowings in
respect of all loans guaranteed by the Government under
this Act shall not exceed one hundred million dollars.

18. (1) The Minister shall keep proper accounts and
other records in relation to this Act and shall prepare
annually a statement of accounts in a form satisfactory to
the Minister of Finance being a form which shall conform
with established accounting principles.

(2) The accounts of the Minister shall be audited by
an auditor appointed annually by the Minister and
approved by the Minister of Finance.

(3) Nothing in this Act shall prevent the Auditor-
General from carrying out any functions of auditing or
reporting on the accounts of the Minister at the request of
the Minister of Finance and for that purpose the Auditor-
General and his subordinate staff shall be entitled to have


Authorised limits
on guaranteed
loans.

Accounts and
audit.

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access to all books, records, returns and reports relating to
such accounts.

19. (1) The Minister shall, not later than four months
after the expiration of each financial year and in any event
not later than the thirtieth day of October next or such other
later date as may be approved by the Minister of Finance,
submit to the Minister of Finance a report containing —

(a) an account of his transactions throughout the
preceding financial year in such detail as the
Minister of Finance may direct; and

(b) a statement of the account of the Minister
audited in accordance with section 18(2).

(2) The Minister shall cause a copy of the report
together with a copy of the auditor’s report to be laid
before both Houses of Parliament and such reports shall be
published in one newspaper published and circulating in
The Bahamas.

20. If any sum is paid out of the Fund established
under section 16 in respect of any liability incurred by the
Minister under a guarantee or other undertaking given in
exercise of the powers conferred by section 16, the
borrower shall repay such sum (together with interest
thereon at such rate as the Minister may prescribe) to the
Fund, as the case may be, in such manner and at such time
as the Minister may direct.

21. (1) An approved lender, who is the creditor in
respect of a guaranteed loan shall notify the Minister where
default has occurred in respect of the loan.

(2) The approved lender shall make all reasonable
efforts to recover the loan and if such efforts have failed
the Minister shall within a period not exceeding two
months following the receipt in writing of the claim under
the guarantee pay to the approved lender all sums owing in
respect of the guaranteed loan and the approved lender
shall transfer to the Minister or his nominee, all rights to
and in respect of the guaranteed loan.

(3) The payment by the Minister to an approved
lender in respect of a guaranteed loan shall discharge the
Government from all liability to the approved lender in
respect of the guaranteed loan.

Annual report.

Borrower to
repay to
Government
sums paid from
the Fund.

Settlement of
guaranteed loan.

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STATUTE LAW OF THE BAHAMAS LRO 1/2006

(4) In this section a person is in “default” whose
payments due under the loan have been outstanding for a
period of three months or more.

22. If any person, in giving any information, making
any application or claim for the purposes of this Act,
makes any statement which he knows to be false in a
material particular, or recklessly makes any statement
which is false in a material particular, that person shall be
liable on summary conviction to a fine not exceeding three
thousand dollars.

23. The Minister may make regulations for the
purpose of giving effect to this Act, and in particular for
prescribing anything by this Act required to be prescribed.

24. Instruments or transactions relating to any loan
guaranteed under this Act shall be exempt from the
payment of stamp duty under the Stamp Act.

SCHEDULE
1. (1) The Committee shall consist of a chairman, a deputy

chairman and not less than three nor more than five other
members appointed by the Minister from persons appearing to
him to be qualified as having experience of, or having shown
capacity in matters relating to education, industry, commerce,
transportation, finance, government, administration or
organization of workers.

(2) The Permanent Secretary of the Ministry of
Education or a person designated by him shall be an ex officio
member of the Committee.

2. A member of the Committee shall hold office for such
period, not exceeding three years as the Minister may direct in
the instrument of appointment of such member, but such
member shall be eligible for reappointment.

3. The Minister shall appoint a chairman and a deputy
chairman of the Committee from among members appointed
under paragraph 1 and if the chairman is absent or unable to act,
the deputy chairman shall act as chairman during the time the
absence or inability continues.

4. A member of the Committee, other than the ex officio
member, may at any time resign his office by instrument in
writing addressed to the Minister and from the date of receipt by
the Minister of the instrument that member shall cease to be a
member of the Committee.

Offences in
respect of a
guarantee.

Regulations.

Exemption from
stamp duty.

Ch. 370.

Constitution of
the Committee.

Tenure.

Chairman and
Deputy
Chairman.

Resignation.

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5. The Minister by instrument in writing, may revoke the
appointment of a member of the Committee if the Minister
thinks it expedient to do so.

6. The appointment, removal, death or resignation of a
member of the Committee shall be notified in the Gazette.

7. There shall be paid to the chairman and other members
of the Committee such remuneration, if any, whether by way of
honorarium, salary or fees, and such allowances, if any, as the
Minister may determine.

8. (1) The Committee shall meet as often as may be
required for the performance of its functions.

(2) The chairman, or in his absence the deputy chairman,
shall preside at all meetings of the Committee.

(3) The chairman, or in his absence the deputy chairman,
and three other members of the Committee shall form a quorum.

(4) The decisions of the Committee are by a majority of
votes and in any case in which the voting is equal, the member
presiding at the meeting shall have, in addition to an original
vote, a casting vote.

(5) Minutes of each meeting in proper form are to be
kept by the secretary or any officer the Committee may appoint
for that purpose, and confirmed by the Committee at the next
meeting and signed by the chairman or a member of the
Committee designated by the chairman as the case may be.

(6) The Committee may co-opt any one or more persons
to attend any particular meeting of the Committee for the
purpose of assisting any particular meeting of the Committee or
advising the Committee in any matter with which the Committee
is dealing, but no co-opted person has the right to vote.

(7) Where a quorum is present, the validity of any
proceeding of the Committee shall not be affected by any
vacancy amongst the members thereof by any defect in the
appointment of a member.

9. Subject to this Schedule, the Committee has the power to
regulate its proceedings.


Removal.

Publication.

Remuneration.

Meetings.

Authority to
regulate its
proceedings.