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Student Loans Repayment and Recovery: International Comparisons

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  • Shen, Hua

    (Peking University)

  • Ziderman, Adrian

    (Bar-Ilan University)

Abstract

Student 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.

Suggested Citation

  • Shen, Hua & Ziderman, Adrian, 2008. "Student Loans Repayment and Recovery: International Comparisons," IZA Discussion Papers 3588, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3588
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    References listed on IDEAS

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    1. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 2, chapter 25, pages 1435-1503, Elsevier.
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    1. repec:got:cegedp:137 is not listed on IDEAS
    2. Zilkha, Gury, 2018. "Innovative higher education learning outcomes and financing trends in Israel," International Journal of Educational Development, Elsevier, vol. 58(C), pages 128-136.
    3. Mónica Oviedo León, 2010. "Expansion of higher education and the equality of opportunity in Colombia," Investigaciones de Economía de la Educación volume 5, in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Gregorio Gim (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 28, pages 538-560, Asociación de Economía de la Educación.
    4. Melguizo, Tatiana & Sanchez, Fabio & Velasco, Tatiana, 2016. "Credit for Low-Income Students and Access to and Academic Performance in Higher Education in Colombia: A Regression Discontinuity Approach," World Development, Elsevier, vol. 80(C), pages 61-77.
    5. Schwager, Robert, 2012. "Student loans in a tiebout model of higher education," University of Göttingen Working Papers in Economics 137, University of Goettingen, Department of Economics.

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    Keywords

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    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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