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Caribbean Banking

10 Ways Your Caribbean Lender Is Robbing You Blind

10 Ways Caribbean Banks Are Robbing You Blind

When I signed up for a Caribbean student loan to fund my college education, I thought I made a simple agreement.

I know, now, that it was everything but a simple financial obligation, and after my own lender messed up my student loan, I identified 10 ways your Caribbean lender is (probably) robbing you blind.

Non Disclosure of Policies and Procedures

Although you signed and agreed to a promissory note for your student loan from your Caribbean lender, details on its policies for applying principal payments, the process to apply for deferment, what happens to interest that builds up during your in-school or post-graduation grace period and when you will have an opportunity to keep outstanding interest from being added to your loan’s principal balance, are not disclosed to you in writing.

The result: You lack a full understanding of what you agreed to, and your lender makes more money

Mysterious Account Transactions

When you signed up for a student loan, you expect transactions to involve disbursements of loan funds, accrual of interest, loan payments and not much else. Yet your Caribbean lenders apply mysterious fees without much explanation, set payments aside to phantom holding accounts, record disbursements you did not request, and fail to apply payments to your loan account even after the funds have cleared from your personal bank account.

The result: You pay more in interest & fees, and your lender makes more money

Not Issuing Regular Statements

Even though transactions occur on your student loan account monthly, you don’t receive regular statements. Most times, it’s impossible for you to know what the status of your loan is, whether your payments were properly applied, and you can’t even be sure if your principal balance is on an upward or downward trend.

The result: You’re confused about what you owe, and your lender makes more money

Limited Access to Account Information

You’ve tried to get up-to-date information about your account, but experience delayed responses and if your lender offers online account access, the account information is hard to discern. Getting a clear picture of what you owe in terms of outstanding principal and interest balances, or how many payments you have remaining, seems out of reach.

The result: You can’t stay on top of what’s happening on your loan account, and your lender makes more money

Outdated Methods of Payment

Because the options to pay your student loan are cumbersome, your on-time payments are delayed and show up on your account, days past the due date. Your lender’s idea of innovation is an online payment option that involves the multi-step process of downloading a form and submitting a copy of multiple forms of identification, to make a payment by credit card or by directing you to third-party bill payment platform, whose system has with varying payment delivery times.

The result: You get hit with late fees and default notices, and your lender makes more money

Losing Track of Payments

You submit your monthly payments using the options available to you, then months (or even years) down the line, when you are able to get a copy of your loan statement, you realize that multiple payments are missing or not properly applied to your account. Your loan’s principal balance, that you thought that you were chipping away at with each payment, is stagnant or reduces only slightly.

The result: You end up repaying your loan for a longer period of time, and your lender makes more money
Related Article: How I Shaved $6,000 Off My Caribbean Student Loan After Making $4,000 in Interest Only Payments

Capitalization of Interest Without Prior Notice

Capitalization of outstanding interest on your student loan has a huge impact on the total cost of the debt to you and the size of your monthly payments. Yet, your Caribbean lender fails to inform you of when it takes place, and what happens to outstanding interest after capitalization.

The result: You pay interest on top of interest, and your lender makes more money

Withholding Extra Payments

After making room in your budget to submit extra payments to pay down your student loan faster, your receipts fail to reflect how it was applied to your account. You contact your loan officer, and you are surprised to find out, that although the money for your extra has left your own personal bank account, it has never made it to your loan account.

The result: Your loan accrues more interest than it would if your extra payments were applied, and your lender makes more money

Not Warning About Interest-Only Payments

Although it’s easy to tell when your principal balance stays the same after on-time payments, it’s harder to figure out why. You are totally unaware of when your loan effectively becomes an interest-only loan and receive no warning from your Caribbean lender when your loan negatively amortizes.

The result: The total cost of your loan can potentially double over time, and your lender makes more money

Subpar Customer Service

On top of the inefficient operations of your Caribbean lender, the customer service is the worst. In order for you get a minimum level of service, you have to contact a friend of your family who works at the bank directly. Other than that, the best case scenario is to endure frustratingly long hold times, unanswered emails, and unresponsive and rude staff.

The result: You are repeatedly worked up by the low level of service, and your lender makes more money

All these practices work together to bring more profits to your Caribbean lender at your expense. Make sure to use these 7 steps to keep avoid these lender mishaps and cut the costs of your Caribbean student loan.

~Melisa Boutin


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The Caribbean Development’s Student Loan Scheme Assessment

The Caribbean Development Bank's Student Loan Scheme Assessment

 This post if part of the Financial Information Month 2016: Student Loan Series. During the Month of October, I will be sharing information about Caribbean Student Loans, stories from borrowers and highlighting the missed opportunities to address the current issues with the Student Loan System in the Eastern Caribbean.

Just over 3 decades after the Caribbean Development Bank set up the Student Loan Scheme in the Caribbean, a report on the assessment of the Scheme issued in 2005. The assessment explored the impact and effectiveness of the money provided to Banks throughout the Caribbean to offer student loans in the respective countries.


The Caribbean Development's bank Student Loan Scheme Related Article


What interested me the most about this report, were:

  • The interviews that the assessment team conducted with borrowers;
  • The  areas of improvement for Caribbean lenders identified; and
  • The fact that recommendations made largely remain unaddressed more than 10 years later.

I was very surprised that this assessment existed and even more surprised to read about the borrowers’ experiences that mirrored Caribbean student loan borrowers’ experiences with the same Student Loan Scheme today.

Here’s what the assessment found.


Caribbean Student Loan Borrower Experiences

Caribbean Development Bank Universalia 2005 Student Loan Scheme Assessment Borrower Experiences


Caribbean Lender Areas For Improvement

Caribbean Development Bank Universalia 2005 Student Loan Scheme Assessment Areas for Improvement for Caribbean Student Loan Lenders

 

I find it amazing that not much has changed since Caribbean borrower experiences were documented and specific recommendations for improvement for Caribbean lenders were reported.

What do you think about the 2005 assessment’s findings and recommendations?


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St. Kitts-Nevis-Anguilla National Bank Borrower Student Loan Story

St Kitts Nevis Anguilla National Bank Student Loan Borrower Experience

This post if part of the Financial Information Month 2016: Student Loan Series. During the Month of October, I will be sharing information about Caribbean Student Loans, stories from borrowers and highlighting the missed opportunities to address the current issues with Student Loan System in the Eastern Caribbean.

Today I am sharing a Kittitian student loan borrower’s experience with a student loan from the St. Kitts-Nevis-Anguilla National Bank Limited. The borrower requested to remain anonymous and I have respected that request. Here is this borrower’s Caribbean Student Loan Story.

Question 1: What best describes your experience with having a Caribbean Student Loan?

It has been a nightmare!

Question 2: When you first took out your student loan, what was your understanding of what you signed up for?

That it was [$37,202 US ($100,000 EC) ] I would pay the interest only while in [school] which would keep loan at [$37,202 ($100,000 EC)] then upon graduation, after a grace period, I would begin to pay off loan in full with comfortable monthly payments that was realistic to my income/expenses and that this would be calculated on the reducing balance system.

Question 3: Was it clear to you what the interest rate was, the amortization method used, how interest would accrue while you were in school & during the repayment period?

I was told [if] I paid interest only while in school I would not [have accrued] onterest in my loan until graduation. The opposite happened they charged me interest still.

Question 4: Were you the first in your immediate family/ household to go to college and take out a Caribbean Student Loan?

No.


I was told [that if] I paid interest only while in school I would not [have accrued] interest in my loan until graduation. The opposite happened, they charged me interest still.


Question 5: Did anyone in your family have a student loan who could provide guidance and tips to help you navigate your own student loan?

No.

Question 6: Share your experience navigating your student loan? What information was provided to help you understand your loan? Describe your experience communicating with your lender, and the customer service you received.

My experience has been like living in [hell]. No additional information has been provided to me despite my request. The communication between the bank and myself is horrible. They are not interested in answering my questions only collecting their money. Their phone service is horrible. I cannot verify myself over the phone although I answer all my security questions correctly, getting statements from them is a nightmare as well.

Question 7: Since having your student loan, how easy or difficult has it been to request disbursements, payment status or account balance information from your lender?

In the beginning, it was very difficult, I used to get disbursement via cheques and the cheques would either have the wrong name on it, the wrong amount or arrive extremely late. Then later on the money was deposited to my account and I would just have to pay by swiping the card. But even that was a challenge because the card would have a block on it for international transactions which was ridiculous since I lived in the USA. Every semester I would walk through hell just to get them to open up the card so I could pay my tuition. Then, in the end, it’s another battle of trying to get payment statements and balances.

Question 8: What have you found the most effective way to communicate with your lender?

Dealing with someone you or your family knows, personally.

Question 9: Is there any aspect of your student loan that you are still unclear of today (e.g. how payments are applied to your balances, how many payments you have left of how to pay off your loan faster, how to get your loan out of default, how to resolve an ongoing dispute)?

How my payments are applied to my loan and why my balance is hardly moving.

Question 10: Have you had any disputes with you lender related account transactions, outstanding principal or interest balances, fees or payments not applied as you expected?

Yes.


Related Article My Caribbean Student Loan Story


Question 11: Have you faced the situation of not being in a position to pay your required monthly payment? If so, did you request temporary relief from payment and was there clear information about how to seek out and be approved this relief?

No.

Question 12: What did you wish you had known about Caribbean student loans before you took one out?

That it was a nightmare and that I should have never taken out one.

Question 13: What advice would you give to someone who is considering taking out a Caribbean student loan?

My honest answer would be, don’t. Do a private [personal] loan, interest rates seem higher but in the long run it’s better than a student loan.

Question 14: Share any other thoughts you have about Caribbean student loans or your lender.

Banks need to come up with a system that opens the lines of communication and understanding between lender and borrower. Banks need to be timely and accurate on their statements. Banks need to improve on how students living overseas can access their accounts and verify themselves.

This is quite a story! I really wish this borrower did not have to go through this. Experiences like these highlight how serious the challenges are and confirm exactly why we need this Student Loan Series.

Tasha’s Caribbean Student Loan Story

 

Tasha's Caribbean Student Loan Story

This post if part of the Financial Information Month 2016: Student Loan Series. During the Month of October, I will be sharing information about Caribbean Student Loans, stories from borrowers and highlighting the missed opportunities to address the current issues with Student Loan System in the Eastern Caribbean.

Today I am sharing Tasha’s answers to questions about her experience with her Caribbean Student Loan from the Development Bank of St. Kitts and Nevis that she submitted via the Share Your Story Form. She completed lives and works in the United states and is a graduated of the University of Houston Downtown Campus. Here is Tasha’s Caribbean Student Loan Story.

Question 1: What best describes your experience with having a Caribbean Student Loan?

It has been a nightmare.

Question 2: When you first took out your student loan, what was your understanding of what you signed up for?

I understood that I borrowed a sum of money that I would have to pay back plus interest after completing my studies. However I expect clear upfront information, proper account management with accurate documentation of loan activities.

Question 3: Was it clear to you what the interest rate was, the amortization method used, how interest would accrue while you were in school & during the repayment period?

The interest rate was stated as 9% there was no other mention of how it would be calculated.

Question 4: Aside from the bond or promissory note you signed agreeing to the terms and conditions of the student loan, did you receive any additional correspondence of how to navigate your student loan

No.

Question 5: Were you the first in your immediate family/ household to go to college and take out a Caribbean Student Loan?

Yes.


Tasha - Development Bank of St. Kitts & Nevis Student Loan Borrower
Tasha – Development Bank of St. Kitts and Nevis Student Loan Borrower

Question 6: Did anyone in your family have a student loan who could provide guidance and tips to help you navigate your own student loan? 

No.

Question 7: Share your experience navigating your student loan? What information was provide to help you understand your loan? Describe your experience communicating with your lender, and the customer service you received.

No information was provided to aid in understanding the loan. There has been lack of information, unexplained discrepancies, unreturned phone calls and unanswered emails.

Question 8: Since having your student loan, how easy or difficult has it been to request disbursements, payment status or account balance information from your lender?

It took years to get statements [and] pretty [much] any account information.

Question 9: What have you found the most effective way to communicate with your lender?

None.

Question 10: Is there any aspect of your student loan that you are still unclear of today (e.g. how payments are applied to your balances, how many payments you have left of how to pay off your loan faster, how to get your loan out of default, how to resolve an ongoing dispute)?

All of it.

Question 11: Have you had any disputes with you lender related account transactions, outstanding principal or interest balances, fees or payments not applied as you expected?

Yes.


Related Article My Caribbean Student Loan Story


Question 12: Have you faced the situation of not being in a position to pay your required monthly payment? If so, did you request temporary relief from payment and was there clear information about how to seek out and be approved this relief?

No.

Question 13: What did you wish you had known about Caribbean student loans before you took one out?

[Wish] I had better borrowing options . I would have never considered borrowing from a Caribbean bank.

Question 14: What advice would you give to someone who is considering taking out a Caribbean student loan?

Seek other options first

Question 15: Share any other thoughts you have about Caribbean student loans or your lender.

They need to do a lot better

Thank you Tasha for sharing your story!


What has your experience been with your student loan? I would love to feature your story. Your can submit your story all throughout out the Month of October 2016. Just click the below to join the regional and diasporic conversation!

Submit Your Story


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Kimalee’s Caribbean Student Loan Story

Kimalee Caribbean Student Loan Story

This post if part of the Financial Information Month 2016: Student Loan Series. During the Month of October, I will be sharing information about Caribbean Student Loans, stories from borrowers and highlighting the missed opportunities to address the current issues with Student Loan System in the Eastern Caribbean.

Today I am sharing Kimalee’s answers to questions about her experience with her Caribbean Student Loan from the Grenada Development Bank that she submitted via the Share Your Story Form. She completed an Honours Bachelor’s Degree in Human Rights and Law and a Master’s Degree in Legal Studies, both at Carleton University in Ottawa, Canada. Kimalee currently lives and works in Toronto Canada and is the Co-Director & Project Coordinator for Groundation Grenada, a social action collective that supports innovative change. Here is Kimalee Caribbean Student Loan Story.

Question 1: What best describes your experience with having a Caribbean Student Loan?

I have a lot of issues with my Caribbean Student loan.

Question 2: When you first took out your student loan, what was your understanding of what you signed up for?

That my education would be paid for; that it wouldn’t be a concern until I had graduated and had gotten a job and that I would be finished paying it within a few years.

Question 3: Was it clear to you what the interest rate was, the amortization method used, how interest would accrue while you were in school & during the repayment period?

No, not really.

Question 4: Were you the first in your immediate family/ household to go to college and take out a Caribbean Student Loan?

Yes.


kimaleephillip-sls-story
Kimalee Phillip – Grenada Development Bank Student Loan Borrower

Question 5: Did anyone in your family have a student loan who could provide guidance and tips to help you navigate your own student loan? 

No.

Question 6: Share your experience navigating your student loan? What information was provide to help you understand your loan? Describe your experience communicating with your lender, and the customer service you received.

My mother was my main contact with the bank as I was studying in Canada. I realized only years after that she had been contributing to my loan while I was in school. When I finally took control of my loan from my mother, I felt a bit like a fish out of water. It was my first loan, the monthly payments were and continue to be quite high and trying to secure consistent and clear information from the bank was always a fight.

Question 7: Since having your student loan, how easy or difficult has it been to request disbursements, payment status or account balance information from your lender?

It seems as though it’s not common practice for the bank to provide regular statement updates which I’ve always found quite odd so I”m constantly having to ask and intervene which is frustrating.

Question 8: What have you found the most effective way to communicate with your lender?

Contacting a specific staff member who is always helpful.

Question 9: Is there any aspect of your student loan that you are still unclear of today (e.g. how payments are applied to your balances, how many payments you have left of how to pay off your loan faster, how to get your loan out of default, how to resolve an ongoing dispute)?

I am still a bit unclear how payments are applied to the loan and though my payments are up to date, I’m unclear about the status as it’s been months since I’be received a status update.

Question 10: Have you had any disputes with you lender related account transactions, outstanding principal or interest balances, fees or payments not applied as you expected?

Yes. There were times when I noticed that the balance on my loan had increased so there has definitely been confusion on my end re: how payments are applied.


Related Article My Caribbean Student Loan Story


Question 11: Have you faced the situation of not being in a position to pay your required monthly payment? If so, did you request temporary relief from payment and was there clear information about how to seek out and be approved this relief?

Definitely! There have been many times. I was able to secure a reduction in the interest rate applied to my loan and again, due to confusion, I’m not sure if this was due to temporary relief or over-payments but for a few months, I didn’t have to contribute to my student loan

Question 12: What did you wish you had known about Caribbean student loans before you took one out?

That it would feel like having a mortgage without a house and that the repayment schedule would have been this long and difficult

Question 13: What advice would you give to someone who is considering taking out a Caribbean student loan?

As much as you can, first try to seek out scholarships; a student loan should be your absolute last choice and if you do need to take one out, first go to your credit union as opposed to a bank.

Question 14: Share any other thoughts you have about Caribbean student loans or your lender.

People are being encouraged more and more to go/return to school and further their education; and the chances of finding a job without a form of post-secondary education (PSE) degree is becoming increasingly more difficult; therefore it is imperative that we make access to PSE a lot more [easy] and equitable. It is irresponsible and unjust to create a debt-ridden population, must of whom already come from working-class families and backgrounds who then remain in debt for the rest of their lives or who spend a significant amount of time paying off a loan which is sometimes three times as much as the original loan amount due to interest rates and who are then unable to invest in the economy.

Thank you Kimalee for sharing your story!


What has your experience been with your student loan? I would love to feature your story. Your can submit your story all throughout out the Month of October 2016. Just click the below to join the regional and diasporic conversation!

Submit Your Story


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