student loan programs alternative financing for higher education

Student Support Programs
Student Loans and Grants
Findings from IIEP/UNESCO
studies
Les programmes d’aide
aux étudiants
Prêts et Bourses
Resultats des Etudes par
L’IIPE/UNESCO
Case studies and comparative
analyses
 In
Asia: China (Mainland and Hong Kong),
the Philippines, South Korea, Thailand
 In Europe: the UK, Finland, Spain, Sweden,
Poland, Russia, Moldova
 Key observations: Contrasting experiences,
country-specific policies, sensitive to
change due to intertia
OECD average
Poland1, 2
Mexico
Hungary1
Slovenia
Korea
Czech Republic2
New Zealand
Israel2
Italy2
Belgium
Ireland
Iceland
France
Australia2
Spain
Japan
Germany
Finland
Austria
United Kingdom
Switzerland1
Netherlands
Denmark
100 000
90 000
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
Sweden
In equivalent USD converted using PPPs
Chart B1.5. Cumulative expenditure by educational institutions per
student over the average duration of tertiary studies (2007)
Note: Each segment of the bar represents the annual expenditure by educational institutions per student. The number of segments represents the average number
of years a student remains in tertiary education.
1. Public institutions only.
2. Tertiary-type A and advanced research programmes only.
Countries are ranked in descending order of the total expenditure by educational institutions per student over the average duration of tertiary studies.
Source: OECD. Table B1.3b. See Annex 3 for notes (www.oecd.org/edu/eag2010).
Need for Additional Resources
Un besoin de revenus complémentaires




Government budget-limited vs. massification
Budget du gouvernement : limité
Efficiency gains, savings, cost-cutting
Gains de rapport, économies, reduction des couts
Diversify resource base with private funds
Diversification de la base de revenus grâce à des
fonds privés
Primary beneficiary: students
Les premiers bénéficiaires en sont les étudiants
Extra individual income for university graduates in US$
(OECD, 2009)
Cost-sharing using
Private Funding (fees)
Partage avec les Fonds Privés
(frais)

Family resources
Les ressources des familles

Student earnings
Les revenues des étudiants

Students’ future earning/foreign students
Les revenues futures des étudiants/les
etrangers









The economic implications of fewer international higher education students in
Australia
26 September 2010.This report argues that economic output associated with Australia's
third largest export industry will shrink by as much as $600 million in 2011 and by $1.2
billion to 2012, unless urgent action is taken on pressing policy concerns.
The report, commissioned by the John Curtin Institute of Public Policy (JCIPP) at Curtin
University shows that:
Higher education is the most significant part of the sector. With 32% of the international
student market it generates 57% of the export revenue.
International on-shore education is now a billion dollar industry in its own right in New
South Wales and Victoria, generating value-added of around $3 billion in each state. It
has an overall economic impact of $1.4 billion in Queensland.
On average each International student in higher education generates $50,874 for
Australia, 36% of this being spent on fees with the remainder mainly on
accommodation, food, restaurants and retail.
For every two International students enrolled in an Australian university one extra job is
created.
This value add from International university students in 2009 saw an additional 102,387
jobs created, of which 83,050 were created outside the education sector.
Publication type Report Publisher Type Academic research centre Coverage Australia
Permanent URL http://www.apo.org.au/node/22681
Cost Recovery (student loans)
Recouvrement des Couts (prets
aux etudiants)



Increases efficiency
Accroît l’efficacité
Enhances equity
Renforce l’équité
Expands source of revenue
Développe la source des revenus
Equity Issue
La question de l’équité

What if qualified students cannot pay?
Et si des étudiants qualifiés ne peuvent pas payer ?
Mix with grants
Possibilités des bourses
-
-
Student Loans
Les Prets aux étudiants

Mortgage-type: specified time period, fixed payments
de type crédit immobilier : durée déterminée, paiements
échelonnés

Problems Problèmes

Harms access Nuisible quant à l’accès
Costly Cher
Defaults Des inconvénients
No private funding Pas de financement privé



Alternative Alternative
Income-contingent student loan
Prets aux étudiants ordonné aux revenues
Or/ou
Graduate Tax
Impot sur les revenues des diplomes
Income Contingent Student Loan
Emprunt étudiant ordonné aux revenus
 Enables
students to defer payments until
they are working
Permet à l’étudiant de différer le
remboursement juqu’au premier salaire
 Allows
needy access to higher education
Facilite l’accès des plus démunis à
l’enseignement supérieur
Reforming the Funding System
La réforme du système de financement








Share costs Coûts répartis
Minimize deterrent effect on poor
Effet dissuasif pour les pauvres diminué
Benefit adults and young Adultes et jeunes sont concernés
Income contingent repayments Paiements en fonction du revenu
Payments equal cost of loan
Paiements équivalents au coût de l’emprunt
Payments over lifetime Paiements échelonnés sur la vie
Minimize default Défauts de paiements réduits
Loan not public expenditure Un pret, pas une dépense publique
Improving the Performance of Deferred
Payment Programs
Amélioration de la performance des
programmes de paiement différé




Student loan programs should be targeted
Les programmes de prêts aux étudiants doivent être
ciblés
Hidden subsidies limited
Subventions cachées limitées
Likely pattern of graduate earnings taken into account
Prise en compte de schémas semblables pour les
revenus des diplômés
Program management by banks
Gestion des programmes par les banques
Successful loan programmes
require specific conditions:
Les programmes de prêts réussis
requièrent en particulier :

Adequate initial capital
un capital initial suffisant

Realistic interest rate to cover
inflation and administrative costs
un taux d’intérêt réaliste qui couvre
les coûts d’inflation et la gestion

Effective targeting to identify
needy students
un ciblage précis pour identifier
les étudiants nécessiteux

Efficient loan recovery
mechanisms, using banks,
tax or social security system
des mécanismes efficaces de
recouvrement, via les banques,
les impôts ou le système
sécurité sociale
Effective publicity to change
attitudes of students/employers
une communication efficace pour
changer le comportement
étudiants/employeurs
de

Student Loans may be feasible Les prêts étudiants pour être
but have to be well designed
réalisables doivent être bien conçus
Effective loan programmes require:
Les programmes de prêt efficaces exigent
des conditions générales comme :

Sound institutional structure
une structure institutionnelle solide

Sound financial management
une gestion financière saine

Sound legal framework
un cadre juridique sain

Effective machinery to support
target groups
un mécanisme pour cibler les
groupes prioritaires

Effective machinery for loan
recovery to minimize default
un mécanisme efficace pour
optimiser le recouvrement des prêts

Public campaigns to ensure
understanding & acceptance
une campagne d’information pour
expliquer et faire accepter
Tuition fees in the UK
Full-time courses
If you’re a new student (or a continuing student who started your course in or after
September 2006) the maximum tuition fees you’ll be charged are £3,290 for the
2010/11 academic year. For 2009/10, the maximum is £3,225.
Exactly what you’re charged depends on the university or college you attend, your
course, and where in the UK you study. You can get a Tuition Fee Loan to cover the
full cost of your tuition fees. This is paid directly to your university or college. The
amount you get does not depend on household income.
If you're a new student starting a full-time course in 2010/11, you can use the Student
Finance Calculator to work out a budget.
Remember that if you take out the student loans available to full-time students, you
don’t have to start paying them back until you’ve left your course and are earning over
£15,000.
Student loans accrue interest from the date they are paid out, up until they are repaid
in full.
Tuition fees in France
The fees are determined by the government, and not by the institution itself. A
basic fee for an undergraduate course in 2010/2010 is Euro174 per year; for a
Master’s course it is Euro237 per year; for a Ph.D it is Euro359 per year. In
addition, students pay social security charges of Euro200 per year.
Fees at the Grandes Ecoles vary but are generally high. Fees for a classic business
school costs between Euro5,000 and Euro10,000 per year, whilst an engineering
school can cost up to Euro15,000.
Universities are trying to overcome the government restrictions by charging
higher fees for new courses and extra-curriculum activities.
Examples of fees
at private universities – US$30,260
In public universities – US$7,170
 USA:
-
In Japan: US$4,500
- In China: US$3,000
- In India: US$600
-
Chart B5.3. Relationships between average tuition fees charged by public
institutions and proportion of students who benefit from public loans
Average tuition fees charged by public institutions in USD
6 000
United States2
4 500
Japan
Australia
3 000
New Zealand
Netherlands2
1 500
Italy2
Austria
Spain
Belgium (Fl.) 2
France1,2
Finland
0
0
25
50
Iceland
Norway2
75
% of students who benefit from public loans AND/OR scholarships/grants
1. Average tuition fees from USD 179 to USD 1 206 for university programmes dependent from the Ministry of Education.
2. Year of reference 2007-08.
Source: OECD. Tables B5.1 and B5.2. See Annex 3 for notes (www.oecd.org/edu/eag2010).
Sweden2
100
Panel Discussion:
-An overview of ASEM countries with student loan and grant
system in place;
-Similarities & differences of various approaches;
-Need for studies on future demand for higher education and
related trends in higher education finance;
-Possible other forms of cost-recovery (graduate tax?),
to what extent it is possible to resolve problems associated
with student loans?
-Suggestions, criteria and issues for possible improvements
Thank you!
 Igor
Kitaev
IIEP/UNESCO, Paris
[email protected]