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Tuesday, July 12, 2005

student loan, comrade?

On an average weekday, I spend about 8 hours researching tuition and PSE releated issues.

I found this today and thought I would share...

"In 2002, the Savings Bank of the Russian Federation (Sherbank) announced the start of what was then described as Russia’s first student loan program, The Educational Credit Program, which was to provide loans to students from low and middle income families to cover up to 70 percent of tuition costs, to be repaid with interest over a period of up to ten years. The bank announced that 1.5 billion rubles (then about $1.5 million) had been set aside for the venture. However, at least through 2003, it appeared that no loans had actually been granted by Sherbank, and the bank spokespersons at that time were reported to have been very reticent even to discuss it, leaving some doubt as to whether there had ever been an intention to implement the announced program (Protapenko 2002, Mac Williams 2001). In all likelihood, however, the program as proposed—with no prospect either of a governmental subsidy or a governmental guarantee—was not viable even if the intentions had been sincere. As of 2004, the only Russian governmental initiative for student loans has been a proposal to provide workforce contingent loans. These would be grants or vouchers to institutions in place of the institutional grants that provide tuition-free higher education to students scoring high enough on the institutional or national entrance examinations. By this proposal, students who fail to obtain a tuition-free place could be admitted as though they had qualified for a tuition free place as long as they agree to work for a certain period of time after graduation in an appropriate profession or place. If they do not abide by this agreement, the institutional subsidy must be repaid. Thus, the government subsidy is to be treated as a full tuition grant—but only as long as the student in fact accepts the critical need work assignment—and as a tuition loan if he or she declines the assignment. (Protapenko, 2002 p. 5). Significantly, however, there is to be no interest charged on the tuition loan, so there would appear to be no real penalty on the student who declines the assignment, and in fact a substantial incentive (i.e. an interest free loan) to take the higher education with no intention of compliance. As of 2002, it was not clear exactly how the program of subsidies was to be administered, the students selected, or the tuition loan—if it were to become a loan—was to be handled. (Protapenko 2002, Vossenstyne 2002). As of 2005, then, Russia seems still to have no governmentally-sponsored student loan program."

Can you say "needlessly complicated?" I'm willing to bet that the 1.5 billion rubles were never there in the first place.

(The full paper, titled "Higher Educational Accessibility and Financial Viability: The Role of Student Loans" by Dr. D. Bruce Johnstone of the International Comparative Higher Education Finance and Accessibility Project (ICHEFAP) at the University of Buffalo, can be found here.)

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