An independent investigation has shed light on the lack of transparency and competition in the loan allocation process of the State Educational Loan Fund.
An independent investigation has shed light on the lack of transparency and competition in the loan allocation process of the State Educational Loan Fund.
An audit report released on May 16 has exposed systemic corruption within the State Educational Loan Fund of Mongolia, a body that has been issuing educational loans to students for higher education abroad since 1997.
On May 22, a list of loan recipients and their remaining balances was made public, revealing the extent of corruption and leading to demands for repayment.
An independent investigation has shed light on the lack of transparency and competition in the loan allocation process of the State Educational Loan Fund. Batnairambal Otgonshar, former deputy minister of mining and heavy industry, who initially brought this matter to light, discussed the corruption associated with the fund in an interview with Global Voices. Otgonshar is also the International Secretary of the ruling Mongolian People’s Party.
The criteria for loan eligibility in Mongolia are still under scrutiny but having a bachelor’s degree from a top 100 global university is the most common requirement. If a student is from a top 20 university, the specific major pursued is irrelevant, but for students from universities ranked between 20 and 100, the government mandates that they study mining or engineering. However, Otgonshar stated that more than one-third of loan recipients did not attend universities in the top 100.
In 2012, Mongolia made changes to its student loan program: those who obtained loans after that year are now required to fully repay them instead of having the loans canceled if they return to work in Mongolia for five years.
In 2013, Batnairambal Otgonshar was admitted to the MBA program at Harvard Business School, but still needed $100,000 to cover the costs. He applied for a loan from the state fund and underwent an interview process consisting of three simple and technical questions: Which school did he enroll in? How will he repay the loan? Will he return to Mongolia or not?
Despite being included in the list of students granted loans, Otgonshar discovered that someone else had taken advantage of the opportunity meant for him, and he never received the loan. As a result, he has now brought this issue to the public’s attention.
During a press conference, Mongolia’s Education Minister, L. Enkh-Amgalan, revealed 300 sources of data regarding the country’s Education Loan Fund, shedding light on decades of investment in foreign education for promising students.
A total of 2,368 students were granted loans amounting to MNT363 billion (about $104.4 million) from the state budget to study abroad. Among them, 421 were undergraduates, and 1,947 were postgraduates, receiving MNT167 billion (about $48 million) from the fund.
Only about one-third of the allocated MNT167 billion (about $48 million) in stipends for undergraduate students has been disbursed, while nearly all of the 196 billion MNT (about $56.4 million) earmarked for master’s and doctoral students remains unpaid.
The Mongolian government has exempted 867 out of the 1,947 students who studied abroad with the MNT196 billion loan from repayment. However, the procedure for loan exemptions requires parliamentary approval, raising concerns about the legality of the minister’s order to exempt these students without such approval.
In 2012, Lavsunnyam Gantumur, then Minister of Education, initiated the process of writing off student loans. He obtained Cabinet approval and used his ministerial decrees to execute this policy. Subsequent ministers have followed in his footsteps, continuing this practice.
