Student loans in an international perspective : The World Bank experience

This document presents a panorama of international experiences and recent trends. After evoking the rationale for student loans, it discusses the development of this form of student finance from a global perspective. It then summarizes the most salient lessons which can be drawn from on-going World Bank projects and activities in support of student loans schemes in developing and transition economies. In a growing number of countries throughout the world, public resources are proving increasingly insufficient to finance tertiary education. In these countries, cost-sharing between government and the students is becoming the norm. But cost-sharing cannot be implemented equitably without adequate student support mechanisms for academically qualified but needy students. There are two ways of offering financial support: through targeted scholarship schemes and through student loan programs that make funds available to all students who wish to borrow for their education. A great number of institutions and countries have introduced loan schemes which are repaid from subsequent earnings after graduation. Although there is a great variety of lending schemes from an organizational viewpoint, the basic principles remain the same. Students receive loans to cover the direct cost of education (tuition fees, education supplies, including computers) and, in some cases, living expenses until they finish their studies. Then, after a short grace period to find a job, usually from six to twelve months, the graduate starts repaying the loan on a monthly basis.