Realizing the futility of recovering the nearly P2 million in credit extended to students of the Polytechnic University of the Philippines (PUP), the Commission on Audit has recommended writing off the said loans.

In its 2019 annual audit report for PUP, COA also demanded a justification to the payment of Lakbay Aral incentives to PUP faculty members and administrative staff even as it questioned the legal basis for the disbursement of funds for the program.

“The overdue loans granted to the students under the CHED-Student Financial Assistance Program (StuFAP) remained unpaid due to its failure to compel and impose sanctions against the defaulting student borrowers, hence, depriving the government of benefits from the use of the fund had it been collected,” COA said.

Under the CHED program, qualified students may avail themselves of the interest-free loan for  a maximum of P8,000 per semester to cover school fees, course projects and even board and lodging.  

For loans below P4,000, payment should be made within five years.  Above this amount, the loan should be paid in ten years.  However, students are required to repay PUP after two years of availment.

From 2004 to 2019, student borrowers were only able to return P347,226 or 11.60 percent of the P2,994,226 in total loans still uncollected for over 10 years.

COA said this signifies “failure to compel and impose sanctions against defaulting student borrowers.

“It appears that the PUP was lenient in requiring the student grantees to settle their obligation within the repayment period, thereby resulting in the very significant amount of uncollected loan payments,” the audit agency lamented.

Nevertheless, state auditors asked the PUP administration to require the accountant to conduct a thorough review and evaluation of the accounts and exhaust all possible measures to collect. They recommended to write off the dormant accounts if efforts to recover become hopeless.

Meanwhile, COA demanded that the Lakbay Aral incentives granted to PUP faculty members and employees be stopped if the state university fails to justify the expenditures that have so far amounted to P21,374,700.

According to the state audit agency, the incentive is “not among the authorized benefits sanctioned by existing rules and regulations.”

The audit report revealed that PUP adopted a Program on Awards and Incentives for Service Excellence (PRAISE) by granting faculty members and employees Lakbay-Aral incentives.

“Under the incentives scheme, employees and teachers are encouraged to travel to educational, historical and cultural places to “open their eyes and broaden their perspectives and help them establish meaningful relationships within the organization”.

 However, COA insisted that the incentive “runs counter” to the objective of the PRAISE which is to recognize and reward officials and employees for their "significant, remarkable and exemplary accomplishments”.

The PUP management disputed the COA findings, pointing out that the Department of Budget and Management and the Civil Services have yet to issue guidelines pertaining to the implementation of PRAISE.

According to PUP officials, the grant of Lakbay Aral incentives was approved by the board of regents  “within the purview of Republic Act No. 8292 also known as the Higher Education Modernization Act of 1997.

The school administration pointed out that the program is a "monetary motivation” to employees for them to improve production.  It also encourages workers to stay with the PUP by “granting them opportunities for personal and meaningful growth.”