Measure sent to Senate aims to clarify obligations, offer career support for returning graduates
KOROR, Palau (Aug. 4, 2025) — The House of Delegates has passed House Bill No. 12-9-1, HD1 on third reading, advancing significant changes to Palau’s scholarship law aimed at encouraging students who study abroad to return and work in the Republic, while easing financial penalties and offering job placement support. The bill now heads to the Senate for consideration.
The legislation proposes to amend Title 22 of the Palau National Code to clarify and adjust the repayment and work obligations for students who receive government-funded scholarships, grants, or loans. It also expands the duties of the Palau National Scholarship Board (PNSB) to include job placement assistance for returning graduates.
Removing Disincentives for Academic Excellence
In its legislative findings, the Olbiil Era Kelulau (OEK) noted that the current law discourages academic achievement by penalizing scholarship and grant recipients who fail to return and work in Palau. Under existing statutes, students who do not fulfill their work obligation are required to repay 50% of the financial aid they received—regardless of whether it was a loan, grant, or merit-based scholarship.
“The current standard of repayment diminishes the incentive for a student to work hard to achieve top grades,” the bill states, arguing that grants and scholarships are typically awarded based on academic merit and should not be subject to repayment like loans.
The proposed amendment would exempt scholarship and grant recipients from repayment obligations, reserving the repayment requirement only for loan recipients who fail to return and work in Palau.
Unified Return-to-Work Requirement
Another key change in the bill is the removal of the distinction between “priority” and “non-priority” fields in determining the length of time graduates must work in Palau. The OEK emphasized that such classifications are fluid and may not reflect the nation’s evolving development needs.
Under the amended law, all recipients of loans—regardless of field of study—would be required to work in Palau for five years, beginning within two years of graduation. If no job is available in the recipient’s field, a shorter service obligation of 1.5 years for non-priority fields and 2.5 years for priority fields will apply.
Career Support for Returnees
The bill also mandates the PNSB and the Bureau of Public Service System to provide job placement assistance for returning graduates. This includes helping students identify employment opportunities in Palau aligned with their field of study.
If no job is available and the graduate has made a reasonable effort to find one, the service requirement is reduced accordingly. The revised provision aims to balance accountability with realistic expectations in a small job market.
Next Steps
The bill will now be reviewed by the Senate, where it may be amended or passed into law. If enacted, the changes will take effect upon approval by the President or once it becomes law without presidential approval.
The measure has been welcomed by many in the education sector as a long-overdue correction that prioritizes fairness and supports nation-building by incentivizing Palauan students to return home without the burden of unnecessary debt.