Student Loans Around the World

Student Loans in Different Countries

• Student loans help students pay for post-secondary education and associated fees.
• Interest rates on student loans may be lower and repayment schedules may be deferred while the student is still in school.
• Australia's HECS-HELP scheme provides loans that are repaid over time via a supplementary tax, based on taxable income. Discounts are available for early repayment. Means-tested scholarships for living expenses are also available.
• Canada's loans are directly controlled by the government. The Insurance Corporation of British Columbia can withhold issuance or renewal of driver's licenses for delinquent student loan repayments or child support payments or unpaid court fines.
• France, Germany, and Thailand's student loan systems are not discussed in the article.
• New Zealand provides loans for both fees and living costs. While the borrower is a resident of New Zealand, no interest is charged on the loan. Loans are repaid when the borrower starts working and has income above the minimum threshold.
• India's Vidya Lakshmi portal provides educational loans, and banks including SBI, IDBI Bank, and Bank of India have integrated their systems with the portal. The education loan is expected to grow at a rate of 32.3 percent in 2009-10, 39.8 percent each in 2010-11and 2011-12, and 44.8 percent during the period 2012–13 to 2014–15.
• South Korea's KOSAF helps students grow into talents that serve the nation and society as members of Korea.
• United Kingdom's student loans are primarily provided by the state-owned Student Loans Company. Interest begins to accumulate on each loan payment as soon as the student receives it, but repayment is not required until the start of the next tax year after the student completes (or abandons) their education.
• In the United States, there are two types of student loans: federal loans sponsored by the federal government and private student loans. The overwhelming majority of student loans are federal loans. Federal loans can be "subsidized" or "unsubsidized." Subsidized loans do not accrue interest while the students are in school.
• Federal aid policies expanded loan eligibility and shifted from grants to loans starting the rising student debt. The amount of student loan debt had reached $1.6 trillion in 2020.
• Income-based repayment (IBR) plan is an alternative to paying back federal student loans, which allows the borrowers to pay back loans based on how much they make, and not based on how much money is actually owed. IBR plans generally cap loan payments at 10 percent of the student borrower's income.
• The Master Promissory Note is an agreement between the lender and the borrower.Student Loan Criticism and Hong Kong Loan Scheme

Student Loan Criticism:

• Borrowers have expressed feeling victimized by student loan corporations.
• The amounts owed by students on their student loans are almost always higher than the amount owed on credit cards.
• Student loans cannot be discharged in a bankruptcy proceeding unless the debtor can demonstrate "undue hardship."
• After the passage of the bankruptcy reform bill of 2005, even private student loans are not discharged during bankruptcy.
• Andrew Cuomo led an investigation into lending practices and anti-competitive relationships between student lenders and universities in 2007.
• Many universities steered student borrowers to "preferred lenders" which resulted in those borrowers incurring higher interest rates.
• In 2007, a false claims lawsuit was filed on behalf of the federal government by former Department of Education researcher Jon Oberg against Sallie Mae, Nelnet, and other lenders.
• Since 2005, Bankruptcy reform lead debtors have to take the responsibility of private student loan debt in bankruptcy.
• An estimated $1 trillion of student loan debt is currently impacting two thirds of graduating college students in America.
• Joe Biden promised student loan forgiveness in his 2020 presidential campaign.
• 64% of Americans back student loan forgiveness of $10,000 for individuals earning up to $150,000 annually.
• Most economists and investors believe that there is no student loan bubble.

Hong Kong Loan Scheme:

• The loan scheme for Hong Kong students was introduced in 1969.
• This scheme aimed to help full-time students at two universities: the Chinese University of Hong Kong and Hong Kong University.
• The program was extended in 1976 to cover full-time students in the Hong Kong Polytechnic, and further extended in 1982 to cover post-advanced level students in the Hong Kong Baptist College.
• In 1984 loans were expanded to include students in the new city Polytechnic.
• The scheme is controlled by the secretary of the university and Polytechnic Grants Committee, which is advised by the Joint Committee On Student Finance.
• The applicant of the loan scheme must have resided or been domiciled in Hong Kong for three years immediately prior to application.