Higher Education

, Volume 57, Issue 3, pp 315–333 | Cite as

Student loans repayment and recovery: international comparisons

Article

Abstract

Student loans schemes are in operation in more than seventy countries around the world. Most loans schemes benefit from sizeable built-in government subsidies and, in addition, are subject to repayment default and administrative costs that are not passed on to student borrowers. We probe two issues in this paper, for 44 loans schemes in 39 countries: how much of the original loan is an individual student required to repay (the “repayment ratio”) and what percentage of the total costs of loans schemes can the lending body expect to receive back in repayments (the “recovery ratio”)? The analysis shows considerable variation in the size of the repayment and recovery ratios across schemes. Moreover, many loans schemes exhibit sizeable built-in subsidies accruing to student borrowers—in over 40% of the schemes examined, the repayment ratio is 40% or less. Overall loans recovery is considerably lower. Policy implications of these findings are discussed together with a consideration of steps that may be taken to improve the financial outcome of loans schemes.

Keywords

Student financial aid Student loans University finance University subsidies 

Notes

Acknowledgements

Hua Shen was Fred and Barbara Kort Post-doctoral Fellow at Bar-Ilan University when this research was carried out. The authors acknowledge the helpful comments on an earlier draft provided by Miriam Krausz and Shoshana Neuman.

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Copyright information

© Springer Science+Business Media B.V. 2008

Authors and Affiliations

  1. 1.Graduate School of EducationPeking UniversityBeijingChina
  2. 2.Faculty of Mathematics and Computer ScienceHubei UniversityWuhanChina
  3. 3.Department of EconomicsBar-Ilan UniversityRamat GanIsrael
  4. 4.IZABonnGermany

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