Student loans repayment and recovery: international comparisons

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Student Loans Repayment and Recovery: International ComparisonsHua Shen Adrian Ziderman D I S C U S S I O N P A P E R S E R I E S ABSTRACT Student Loans Repayment and Recovery: International ComparisonsStudent 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 percent of the schemes examined, the repayment ratio is 40 percent 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.JEL Classification: I22, H52

Financing Higher Education and Economic Development in East Asia

“…We realise that the implicit subsidy issues have already been discussed in Shen and Ziderman (2008), Tangkitvanich and Manasboonphempool (2006) and . There are similarities in many dimensions to the analysis of Ziderman and we consider this to be an important affirmation of policy concerns with respect to the SLF.…”

Funding post-compulsory education

“…The change was so expensive precisely because the subsidy while still at university applies to all students. A key message is that seemingly small adjustments can be very expensive, a general point evidenced by Shen and Ziderman (2009).…”

Shifting from Government Bursaries to a Loan Scheme in Higher Education: Exploring the Zambian Experience in Student Financial Aid

“…The forgoing arguments for or against are not easy to comprehensively advance. However, international experience and evidence show that well-designed student loans can especially promote access (Shen, 2007;Barr, 2005).…”

“…Indeed no cost sharing policy can be implemented equitably without a well-functioning student loan program to make funds available to needy students who would want to borrow for their education (World Bank, 1994:46). Student loan schemes have become common and widespread throughout the world, at least in more than 75 countries (Shen and Ziderman, 2007). Their introduction in these countries is premised on the understanding that student loan programs are able to expand real cost recovery from students, in addition to promoting higher education participation and accessibility.…”