Characteristics of Student Loans

The basic characteristic of all student loan schemes is that students are offered the chance to borrow money to help them finance tuition costs or living expenses. After completing their studies, graduates must repay the amount borrowed, with or without interest. Although all loan schemes share this basic characteristic, there are important differences in the way different programs are administered, particularly in terms of (1) whether loan programs are operated by the government, independent agencies, banks, or higher education institutions; (2) the level of interest charged, and whether this is subsidized (i.e., lower than commercial or market interest rates); and (3) the way in which repayments are collectedin particular whether loan repayments are fixed over a specific time period (often described as mortgage-type loans), or whether graduates must repay a fixed proportion of their income each year until the loan is repaid (usually described as income-contingent loans).

Evaluation of International Experience

As wide variations exist between programs, comparative studies of international experiencewhich highlight significant differences, examine economic or social effects of alternative systems, and identify strengths and weaknessescan be particularly valuable. A 1986 comparative study of student support in the United States and four European countries (France, Germany, Sweden, and the United Kingdom) by Bruce Johnstone argued that “it was a major premise of this study, borne out by the research, that these and other countries must balance very similar public policy goals in apportioning the costs [of higher education] … Lees verder →