CIES Secretariat    Florida International University    312 ZEB    Miami, FL  33199

Number 144




UNESCO Project on Student Loans in Asia

Yan Zhao and Bruce Johnstone*


            The project: In 2001, the UNESCO Asia and Pacific Regional Bureau for Education (UNESCO Bangkok) initiated a regional comparative study to examine the functioning of government-sponsored student loans schemes in a number of countries in Asia. The study was undertaken in Bangkok in association with the International Institute for Educational Planning (IIEP). UNESCO international lead consultant, Adrian Ziderman of Bar Ilan University in Israel, provided methodological guidance to research teams in each of five countries and territories: P.R. China, Hong Kong S.A.R. China, the Republic of Korea, the Philippines and Thailand. The objective of the project was two-fold: first to improve the efficacy and financial efficiency of existing student loan schemes, and second, to provide a comparative information base for governments intending to reform or refine their loan schemes or to introduce a new one.

 Each study contains two parts: a description of existing government-sponsored student loans schemes, including the background, objectives, implementation procedures, and the like, followed by the problems and issues surrounding its financial sustainability, effectiveness and equity. Each of the five case studies was published as a separate country monographs in 2003 by UNESCO’s Bangkok office and its Paris-based International Institute for Educational Planning.

Lessons learned: This UNESCO comparative study shows that student loans programs can work well, but need to be more carefully designed and implemented. Reasons for unsuccessful loans schemes are because of such factors as insufficient funds, poor initial design (e.g. unnecessarily high subsidies), reliance only on scarce government funding (i.e. an inability to tap the private capital market); inefficient procedures, the wrong operating agents; or excessive intervention of the state in funding and management (as in the case of the Philippines). By extension, the case studies show that successful student loan schemes (successful on any of the several criteria) requires: 1) careful initial program design, 2) cost-effective implementation, 2) clear objectives and target populations, 3) adequate legal frameworks to ensure that the repayment obligation is legally enforceable, 4) effective loan collection machinery,

5) widespread information and publicity campaigns, 6) effective and transparent criteria for determining eligibility, 7) cost-effective targeting of implicit subsidies, and 8) provision for deferring or ultimately forgiving repayments under conditions of hardship (e.g. persistent low earnings).

The UNESCO Ziderman-led teams also reached other conclusions. For example, explicit subsidies (direct grants) are more effective than implicit subsidies, or the “hidden grants” implied by the repayment subsidies. Student loans probably need to be combined with grants and scholarships to ensure maximum access for the dollar for the sake of the disadvantaged. Private deliverers and other private agents, and especially the private capital markets need to be brought into a comprehensive student loan program. There is a need for income contingent features to shield borrowers from the burden of unmanageable debt. Finally, more cost effective approaches toward means-testing and more effective targeting.


*Yan Zhao is a doctoral student in the Sociology of Education at the State University of New York at Buffalo and is associated there with the International Comparative Higher Education Finance and Accessibility Project.

D. Bruce Johnstone is Professor of Higher and Comparative Education at the State University of New York at Buffalo, Director of the Center for Comparative and Global Studies in Education, and Director of the International Comparative Higher Education Finance and Accessibility Project [<Project:



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