Experience with Student Loans, Higher Education

Definition

A student loans scheme is a framework for providing students with loans to meet all or part of institutional fees and/or living expenses. It is usually set up and subsidized by the government. Repayment obligations are deferred until the student enters the labor force and is able to repay the loan out of (presumably) enhanced earnings.

Introduction

Over 70 countries have carried out government-sponsored student loans, though with differing records of success. Given the considerable diversity in the design, practice, and overall efficacy of schemes, the following discussion focuses on five central issues that must be addressed in evaluating a current scheme or setting up a new one. These are the objective of the loans scheme, its initial funding source, the financial viability, justification for government subsidy of loans schemes, and method of repayment collection. A final section considers briefly a number of practical issues that need to be addressed to ensure successful...