Student Loans Repayment and Recovery : International Comparisons

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, aresubject to repayment default and administrative costs that are not passed on to studentborrowers. We probe two issues in this paper, for 44 loans schemes in 39 countries: howmuch 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 toreceive back in repayments (the "recovery ratio")? The analysis shows considerable variationin the size of the repayment and recovery ratios across schemes. Moreover, many loansschemes exhibit sizeable built-in subsidies accruing to student borrowers – in over 40percent of the schemes examined, the repayment ratio is 40 percent or less. Overall loansrecovery is considerably lower. Policy implications of these findings are discussed togetherwith a consideration of steps that may be taken to improve the financial outcome of loansschemes.