Student loan schemes (SLS) have been established inat least 50 countries around the world. The literature illustrates many of the difficulties in running such programs, some of which include the high administrative costs for managing loan schemes, high default rates, and subsidized interest rates. These initiatives all struggle to find the balance between providing some degree of subsidy to needy students and ensuring that the loan schemes are financially sustainable. At the time the SLS was launched in 1972, the CDB was still in its infancy. Its poverty agenda, although evident in its Charter, had not been operationalized as it iscurrently with the introduction of concepts such as the poverty prism and resource allocation strategies that emphasize poverty reduction. Over this 32-yearperiod, implementation of the SLS has brought about a variety in the models and approaches among the BMCs.
Overall, the SLS is deemed as an important toolin CDB’s development effectiveness. The study finds that the SLS has met its objectives of training human resources and improving access to tertiary education in the region. In doing so, it has generally contributed to the HRD needs of the BMCs. Despite concerns about the emigration of graduates, the data from the sample of SLS borrowers traced in this study suggests that the students generally return to serve in the region after graduation. Nonetheless, the “push” and “pull” factors for staying overseasmay lead to significant differences by country at different points in time.
The SLS is an increasingly important source of funding for highereducation, representing more than 50% of the funding mix for a majority of the students interviewed. The impact on students is generally positive – 80% of the SLS borrowers in the study sample indicate that without the SLS, they would not have been able to pursue a post-secondary education. In addition, most of the graduates are able to find jobs shortly after graduation. Students also indicate that their standard of living has generally improved as a result of their participation in the scheme, but some note difficulties in servicing debt as a result of lower than expected salaries after graduation. The debt burden for students and its implications for the sustainability of the scheme require attention from the SLS.
At a broad level, the SLS is perceived to make indirect contributions to poverty reduction in the participating countries because it facilitates opportunities for education and training and helps build country capacities. The SLS, however, has been less successful in providing loans to the poor. The security and guarantee requirements for obtaining student loans limit access to the SLS for the poorest segment of the population. Since the special SLS windows to benefit the poor are in early stages of implementation, relatively few students have benefited to date. The study also found examples of mechanisms to facilitate the accessibility of the SLS, such as guarantee funds and interest relief programs withparticipation of the DFIs, government, and other actors. These mechanisms warrant closer study and monitoring.
The majority of SLS borrowers are female, reflecting general trends in educational enrolment and completion rates in the Caribbean. The study notesthat the gender disparity is a complex social phenomenon beyond the scope of the SLS. At the same time, however, there is no evidence of SLS-specific strategies to address the gender question. Many of the factors that limit the effectiveness of the SLS are not new, nor are they exclusive to the SLS; they are evident in other student loan schemes in the region and around the world.