A measure requiring the government to issue educational bonds for the benefit of underprivileged students attending college has hurdled a committee level at the House of Representatives.
The House committee on higher and technical education approved House Bill 638, or the Educational Bond for Tertiary Education Act which will have the Bureau of Treasury issue educational bonds in the name of every Filipino at birth which gives him or her the right to the proceeds of the security instrument upon maturity.
The educational bond shall be non-negotiable, non-transferable and risk-free with a face value of PHP25,000, a maturity period of 18 years and a fixed interest rate.
The fund will be released to underprivileged 18-year-old students enrolled in a postsecondary nondegree certificate, diploma course in a technical-vocational institution, or undergraduate degree program in any public or private higher education institution.
The beneficiary should be part of a poor household included in the poverty data under the “Community-based Monitoring System Act”.
The bill states that any and all educational bonds assigned to unqualified and disqualified student beneficiaries shall be placed on the auction block one year after the date of maturity.
During his sponsorship speech, Albay Representative Joey Salceda, author of the measure, said it is like a “government-funded lay-away account” or a pre-need college plan, except it is government-guaranteed.
Salceda further emphasized that it will be a way to mitigate intergenerational poverty.
“It takes a poor family 32 years to be able to afford college. I don’t think we should wait that long to provide this potent driver of upward social mobility,” Salceda said.
Salceda also explained the fiscal sustainability of the measure, noting that it is both cash-flow neutral and deficit-neutral.
“Until it actually matures, there is no cash flowing out of the treasury… It is also neutral in terms of the consolidated public sector financial position, since it will not flow out of the government’s coffers,” he said.
Salceda said given the current poverty rates, the government will issue some PHP7.2 billion in bonds for some 288,000 children every year.
He also projected that the notes will bear an interest of 8 percent, government-guaranteed. (PNA)
