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Higher Education Loan Schemes Across the Globe: A Systematic Review on the Utility Derived and Burden Associated with Educational Debt

Author

Listed:
  • Daniel Frank

    (Department of Commerce, Manipal Academy of Higher Education, Manipal 567104, Karnataka, India)

  • Rakshith Bhandary

    (Department of Commerce, Manipal Academy of Higher Education, Manipal 567104, Karnataka, India)

  • Sudhir K. Prabhu

    (Chartered Accountant, DTS Associates, Mumbai 400013, Maharashtra, India)

Abstract

Education is considered an investment in human capital that is gained at the cost of knowledge acquisition. This cost is borne by the beneficiary along with subsidy provided by the government, if any, that is mainly collected through tax revenues. This article aims to systematically review the utility derived and the burden experienced with educational debt borrowers across the globe as per the three types of educational loan schemes present across the globe. This study follows the PRISMA guidelines for review selection, and 47 articles published between 1994 and 2024 were included for the final review. The study results reveal that education improves the quality of life; an educational debt servicing to income ratio above 8% is considered as a financial burden. Also, the results reveal that material benefits are high after education along with an increase in the psychological burden because of repayment concerns. This study highlights the need to move towards designing a flexible repayment system in the education loan scheme based on the income contingent schemes adopted in many countries. Income contingent schemes reduce the repayment burden of the borrowers but the return to the lender is limited to the income of the borrower, and mortgage-based schemes are associated with high repayment burden. Therefore, a dynamic scheme will fix the problems associated with the repayment burden by creating a dynamic link between the benefits received and the contributions made by the borrower.

Suggested Citation

  • Daniel Frank & Rakshith Bhandary & Sudhir K. Prabhu, 2024. "Higher Education Loan Schemes Across the Globe: A Systematic Review on the Utility Derived and Burden Associated with Educational Debt," JRFM, MDPI, vol. 17(12), pages 1-17, December.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:12:p:566-:d:1546153
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    References listed on IDEAS

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    1. Valerie Braithwaite & Eliza Ahmed & Deborah Cleland, 2022. "“Fair to me, fair to us, or fair to you?” Unresolved conflict between government and graduates over Australia’s tertiary education loans," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 25(1), pages 45-61, January.
    2. Gicheva, Dora, 2016. "Student loans or marriage? A look at the highly educated," Economics of Education Review, Elsevier, vol. 53(C), pages 207-216.
    3. 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.
    4. Till Bärnighausen & David E. Bloom, 2008. "Financial incentives for return of service in underserved areas: a systematic review," PGDA Working Papers 3608, Program on the Global Demography of Aging.
    5. Mangrum, Daniel, 2022. "Personal finance education mandates and student loan repayment," Journal of Financial Economics, Elsevier, vol. 146(1), pages 1-26.
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