Mongolian media space blew up on 16 May with the report on systemic corruption surrounding the State Educational Loan Fund.  Based on the audit data in the report, the fund has been ridden with violations and corruption since 1997, when it started issuing loans to students pursuing higher education abroad. The list of all loan recipients, including their names and remaining loan amounts, was published on 22 May, further exposing the scale of corruption and mounting pressure to pay back the loans.

Independent investigation illustrates lack of transparency and competition in the allocation of loans. O.Batnairambal, who was the first one to bring this case to the public’s attention, to learn about the State Educational Loan Fund and the corruption surrounding it. Batnairamdal is a former Deputy Minister of Mining and Heavy Industry of Mongolia and the International Secretary of the ruling Mongolian People’s Party.

Regarding the fund, it is not a scholarship fund, it is a loan fund. It was established in 1993 to provide financial support to students who lacked funds to cover their higher education costs at local universities. In 1997, the fund expanded to students who wanted to study abroad.

It is still a mystery what are the criteria for receiving loans. The easiest criteria is for a bachelor’s degree. Students have to enroll into a top 100 global university. However, more than one third of all recipients got loans despite their universities not being in the top 100. Also, there are preferred majors as a criteria. If students got into a top 20 university it did not matter what major they pursued. If they got into universities ranked between 20 and 100, there were some preferred majors defined by the government, such as mining and engineering.

Up until 2012, student loans were written off under the condition that recipients returned to Mongolia and worked for five years here. In 2012, the government issued a decree, which changed this term. Everyone who received a loan after 2012 has to pay back their loan in full.

It is 30 percent of the total amount issued for higher education. According to the current exchange rate, it is MNT 363 billion (around USD 103 million). This amount was issued to 2,368 students, pursuing undergraduate and graduate degrees from foreign universities.

In 2021, the government adopted the Public Information Transparency Law as part of the initiative to fight corruption. This law allowed access to information, previously not available to the public. I used publicly available information and analyzed it to understand what has happened in the last 30 years and how the fund has been abused.

The main finding of the two-month long investigation is that 90 percent of the loans were issued to high level officials, their children, and those who had access to closed information. There was no transparency or fair competition.

The second finding is that the payback ratio is less than one percent. People always get confused and think that it is a scholarship fund. The 2011 Law on Higher Education and Social Security of Students states that it is an educational loan. People wrongly assume it is a scholarship. That is something I debunked in my report.

The third finding is that 41 percent of the funds allocated to students pursuing master’s and doctoral degrees have been unlawfully written off by ministerial decrees since 2012. It is unlawful because article 8.8 of the law on higher education specifies that anything related to writing off loans issued through a specific fund can be regulated only by the parliament. All the ministerial decrees that wrote off loans are unlawful. It is not my personal conclusion, that is what the audit report by the state audit committee specified in their report. (source: Global Voices)