1. Design and Implementation of Student Loan Schemes: Lessons from International Experience Forum on Financing of Post-Compulsory Education in China Beijing, 6 June 2007

2. Lending for human capital

3. Outline of the Presentation n Why Student Loans? n Design Issues: Types of Student Loans n Implementation Issues: Taking Stock of International Experience

4. Why Student Loans? n Financial viability n Equity n Student motivation n Quality assurance

5. Financial viability n Possibility to introduce / increase tuition fees in public universities n Possibility to expand private tertiary education institutions n Self-financing mechanism

6. Equity n Opportunities for low-income and minority students n Solidarity: helping tomorrow’s students

7. Student motivation n Better individual academic results n Higher internal efficiency in institutions

8. Quality assurance n Linking eligibility of institutions to quality assurance criteria u Accreditation u Labor market outcomes

9. Why government intervention? n Capital market imperfections u Collateral u Information about completion u Information about future income n Equity considerations

10. Outline of the Presentation n Why Student Loans? n Design Issues: Types of Student Loans

11. Scope and Ownership of Student Loan Programs

12. Organizational Structure of Student Loan Schemes

13. Types of Financial Schemes n Direct loans n Guaranteed / shared risk loans n Income-Contingent Loans

14. Direct loans n Public resources n Mortgage type n Subsidies u Interest rate u Default n Repayment not linked to income

15. Guaranteed / Shared risk loans n Government contract with commercial banks n Shared default risk n Mortgage type n Interest subsidy

16. Income-contingent loans n Graduates repay fixed proportion of income n Need for solid recovery channel u Tax System (Sweden / Australia) u Social Security (Ghana)

17. Tuition Postponement Experience (Yale U) n Risk pooling n Moral hazard n Collection for individual university

18. Repayment modes n Fixed payments n Graduated payments n Proportion of income

19. Fixed vs. Graduated Repayment Schedule

20. Outline of the Presentation n Why Student Loans? n Design Issues: Types of Student Loans n Implementation Issues: Taking Stock of International Experience

21. Implementation difficulties n Demand n Funding n Financial Viability n Targeting

22. Demand problems n Awareness n Attractiveness  Interest rate  Priority disciplines  Guarantees  Repayment period

23. Insufficient funding  Overall funding  Stability over time

24. Financial viability n Interest Rate Subsidy n Default Rate  Economic situation  Ineffective collection mechanisms n Exemptions n Administrative Costs

25. Real Interest Rate

26. Real Interest Rates

27. Exemptions n Advanced or on-time payments n Work with priority public institutions n Outstanding academic results

28. Collection  a reliable, preferably universal, system of unique identifiers  accurate record-keeping of the accruing liabilities of students (while studying)  efficient way of determining with accuracy, over time, the actual incomes of former students  collection mechanism with a sound, computerized record- keeping system

29. Loan Recovery (Proportion of Present Value of Loan)

30. Targeting n Leakage due to ineffective screening of applicants n Elimination of targeted students because of excessive guarantees

31. Targeting modalities n Self-declaration with audit n Income tax information n Proxy (secondary education, housing)

32. Guarantees n Guarantor(s) n Moral Guarantor n State n University (SOFES)

33. Loan beneficiaries by income group

34. Success Factors n Efficient Institutional Management n Appropriate Financial Management n Transparent Eligibility Criteria and Processes n Efficient Loan Recovery n Good Information and Marketing System

35. Performance indicators F Demand Indicators F Financial Management Indicators F Operational Management Indicators

36. Demand and Targeting Indicators n Evolution of higher education enrollment rate n Proportion of beneficiaries from low and medium income families n Gender distribution of students and beneficiaries n Geographical distribution of students and beneficiaries n Distribution of students and beneficiaries by academic program n Coverage (number of beneficiaries over student population) n Academic results of beneficiaries (compared to general student population)

37. Financial Indicators n Arrears & default rates (by socioeconomic group, gender, tertiary institution, academic discipline, and amount of loan) n Interest rate subsidy level n Loan recovery ratio n Administrative costs compared to overall portfolio (and distribution of main expense categories) n Cash flow projections n Evolution of real value of assets n Distribution of funding sources n Dependency on government resources n Mobilization of non-government resource n Return on investment

38. Institutional Operations Indicators n Management indicators (measuring the efficiency and quality of internal processes) n Satisfaction of beneficiaries n Turnover of personnel n Indicators of promotion of the student loan program (awareness of the program and understanding of the terms and obligations)

39. conclusion: the student loan challenge n Social vocation: instrument to promote equity n Financial viability imperative u Not a mechanism to deliver subsidies If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest. Benjamin Franklin