Student loans: Challenges in reforming loan structure

The issue of student loans has been flaring up on both sides of the Atlantic quite recently, with some serious implications for higher education if many of the changes were to be implemented in the next few years.

In the US, the efforts of the administration to enact legislation that will ease the financial burden incurred on university students by way of their student loans and the federally subsidized grants has been a major point of friction with Republican opposition. Student loan debt is estimate to close to 1 trillion USD, increasing at a staggering rate of 300% in ten years , whereas the average debt load for the graduates of higher education is approximately $20,000 on average. Given the recovery phase of the US economy and the financial woes that have troubled it since 2008, it becomes obvious that debt restructuring is a key issue.

The importance is twofold. Student loans are proving to be a heavy financial burden, stifling entrepreneurship and forcing many graduates to abandon career aspirations and seek even low-paid employment in order to repay their loans; in the days of the financial crisis aftermath, many find themselves still unemployed and with a negative credit score, painting a rather bleak personal picture of the future. In addition the student loan apparatus involves the federal government, the universities and a series of market players, such as debt relief companies and others, which makes reform not only gruelling but also politically tense.

In the United Kingdom, the government will be conducting research on the issue of student loans, although the department of Business, Innovation and Skills has not confirmed a change in policy. The UK has a relative advantage to the US system since tuition for undergraduate study is capped at £9,000 per year. The system is also more generous, since it allows repayments only if the graduate is employed and earning over a certain amount and the debt itself has a 30 year write off term limit, with outstanding fees written off after that period has elapsed.

The proposed research will be exploring the possibility of making universities partially responsible in underwriting student debt. In theory, this would lead to a closer connection between the graduates and the university, perhaps increasing the investment and effort UK universities will need to put forth in order to ensure high employability rates for the students. It will also mean a shared and thus diminished risk taken on by the Treasury, reducing exposure for the government.

The key issue in the UK remains that if such moves were ever to be implemented, debt to earnings ratios within universities would shrink or even disappear, making universities less able to secure their financial position and thus undertake large and important steps in improving infrastructure, offer scholarships and bursaries to under-represented groups and of course continue to strive for improving educational services without the worry of debt repayment in a flux economic climate. In fact, any alteration to the student loan scheme would have to take under consideration the realities of tertiary education and the job market so as to ensure that the drive for minimal government exposure to debt would affect the teaching quality and outcomes in universities.

Image source: Francisco Diez

Spotlight On Taiwan’s Universities: Low Fees, Booming Enrolments

A Reader’s Digest poll last month found that Taiwan offers some of the best value-for-money degrees in Asia. But political and demographic change may mean that the island’s higher education system will need a new economic model in years to come.

In a recent interview with Higher EducationWorld, Han-Sun (Vincent) Chiang, president of Fu Jen University in Taipei, pointed out that the university has 27,000 students on a campus built for 10,000. The reason in part is that university tuition fees are low, just a few thousand US dollars per year. In addition, there is little mainstream government funding for teaching or research. And because higher education is politically important, with 90 per cent of high school graduates going on to university, fees are held down by central government.

Chiang, a genial medic whose big project is the construction of a 1,000-bed university hospital, says that it is impossible to grow Fu Jen’s student numbers any more. Indeed, it is getting harder to find students as the number of school-leavers falls. Instead, he wants to admit about 5,000 students a year instead of the current 7,000. This would take stress off the university and allow it to enhance student quality.

To make up the financial gap, Chiang plans on plunging more deeply into the international student market. This chiefly means mainland China, although here too there is a political problem. Fearful of “cross-straits” influences, the government limits the number of mainland students allowed on the island.

Another approach is to up the number of postgraduates at Fu Jen. Chiang is especially keen on MBAs, as they pay well and can become generous alumni. But here too there is a political problem. Taiwanese law gives a much better tax break for donations to state universities – led by National Taiwan University, 80 in the QS World University Rankings – than to private institutions such as Fu Jen. The representative body for the private universities is lobbying on this anomaly.

But Chiang says that Fu Jen will not be joining in the possible mergers mooted between some more modest Taiwanese universities. Instead, he prefers to use the institution’s Catholic connections to build links to smaller Catholic universities in the island and to the many large Catholic universities around the world.

● A longer version of this interview will appear in the QS Showcase magazine later this year.

HE News Briefs 14.9.11

  • KOREA: After an extensive audit, 43 institutions have lost important funding
  • ENGLAND: Institutions are rethinking the amount they want to charge for tuition fees
  • INTERNATIONAL: According to a new report, collaborative international degrees are on the rise
  • NETHERLANDS: Morning raids at VU Amsterdam and University of Amsterdam
  • UGANDA: Institution shutting down due to lack of funds and staff discontent
    Read more

Can rankings really help students choose their university?

by Tim Rogers

We live in very interesting times. For decades, the topic of higher education, university admissions, tuition fees and graduate employment featured, if at all, buried deep in the pages of our national newspapers. In recent months, however, since the release of the Browne Report and the UK Government’s White Paper on higher education, universities are front-page news, almost on a daily basis. New demands from students, the Government and employers to make the university experience more relevant to the contemporary labour market have transformed the higher education landscape in the UK and discussions on social mobility, transferable skills and the funding of education are now commonplace.

Interesting times may also dictate changing times for UK and European students aiming to enter university in 2012 and beyond. The implementation of what might be called “market rate” tuition fees calls into question for the first time whether universities and their individual undergraduate degree programs represent value for money equally. With higher rates of student debt facing most students in the UK in the future, the question “what do I get for my money?” arises in a way students have never had to face before. The logical response to such a situation is the provision of more detailed and perhaps greater volumes of relevant advisory information.

The role of rankings, in this context, may prove much more powerful. Related to the UK Government’s own revised approach to higher education, the collection of independent and objective data on the performance of universities across a range of measures, such as entry standards, student satisfaction, tuition fees and graduate employment rates, is likely to be critical for all those concerned with making the right choice on where to study. To quote the White Paper itself, “We will radically improve and expand the information available to prospective students, making available much more information about individual courses at individual institutions and graduate employment prospects.” Read more

Record survey responses fuel QS World University Rankings 2011/2012

Tomorrow sees our latest results emerge on This year we have had the good fortune to attract record survey responses both of Academics and Employers. Over the 33,000 academics and over 16,000 employers have contributed their views to form this year’s response base. More detail on the survey responses is available here:

Academic Survey Response

Employer Survey Response

Fact files have been delivered this year with more detail than ever and international media are poised to publish and reflect on the results in the morning. You will notice something different about the presentation of our tables this year – and that is the emphasis on fees. Wherever we have been able to track down data we are publishing average undergraduate and postgraduate, domestic and international fees this year – giving prospective international students – particulalry those in countries where domestic fees are escalating – an invaluable resource to help make the best decisions.

More analysis here over the next few days.

HE News Brief 5.7.11

  • UNITED STATES: U.S News & World Report recently announced that it will produce a ranking of online colleges
  • GERMANY: Hamburg is set to eradicate tuition fees in 2012, leaving just two states planning to continue charging out of seven
  • UNITED KINGDOM: White paper on higher education causing a furore
  • ABU DHABI: Minister of Higher Education and Scientific Research reiterates the country’s 2019 goal for higher education
    Read more