Student Loans As a Means of Financing Higher Education Lessons from International Experience

This paper examines international experience with student loans as a means of financing higher education, with particular reference to developing countries. Experience in developed countries shows that student loan schemes can and do work. Although critics predicted that students would not be willing to borrow and that loans would discourage low income students and women who would be frightened by the idea of a negative dowry, there is evidence that loans are popular with students; there is no evidence that they discourage women or students from low income families. Student loans should not be regarded as a panacea, but rather as a method of finance which, when combined with tuition fees and selective scholarships can offer many advantages. The conclusion of this study is that it is feasible to introduce student loans in developing countries; they are more equitable than existing patterns of highly subsidised tuition and may contribute to greater efficiency by influencing student motivation and cost consciousness. Student loans are flexible and can be used to provide incentives for particular groups of students or to fulfill manpower objectives. Also, loans can provide a significant source of finance for higher education and vocational and technical education in the long run.