Student loans: an alternative to finance studies used by higher education students in Mozambique
José Amilton Joaquim 1, Luísa Cerdeira 2, Eugénia Flora Rosa Cossa 3
1 PhD
in Economic and Organizational Sociology, Lecturer in the Category of Assistant
at the Faculty of Education at Eduardo Mondlane University, Mozambique
2 PhD
in Educational Sciences, Retired Associate Professor at the Institute of
Education of the University of Lisbon, Lisbon
3 PhD in Educational Sciences, Associate Professor at the Faculty of
Education at Eduardo Mondlane University, Mozambique
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ABSTRACT |
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Student loans
as an alternative to social support for students are a contribution of
economic theory to the financing of higher education. This study seeks to
reflect on loans as a social support policy used by several countries for
higher education students and to show the reality of loans made by higher
education students in Mozambique. Data were collected from a questionnaire
applied to higher education students, for a theoretical sample of 508 and an
empirical sample of 607 students in the province of Gaza, in February and
March 2018. Results reveal that student loans are not a social support policy
co-financed by the Mozambican State, as in other contexts. Students have
turned either to formal institutions, such as commercial and microfinance
banks or to informal associations, called Xitique, to cover the costs of
their studies. This allows concluding that, despite the challenges, loans can
be a positive alternative for the government in the diversification of social
support to students, which will allow better access to higher education,
provided that they are introduced taking into account students/families’
socioeconomic conditions and with efficient mechanisms or systems that help
control borrowers’ reimbursements and disbursements. |
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Received 22 September 2023 Accepted 23 October
2023 Published 06 November 2023 Corresponding Author José
Amilton Joaquim, jhamylton@yahoo.com.br DOI 10.29121/granthaalayah.v11.i10.2023.5350 Funding: This research
received no specific grant from any funding agency in the public, commercial,
or not-for-profit sectors. Copyright: © 2023 The
Author(s). This work is licensed under a Creative Commons
Attribution 4.0 International License. With the
license CC-BY, authors retain the copyright, allowing anyone to download,
reuse, re-print, modify, distribute, and/or copy their contribution. The work
must be properly attributed to its author. |
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Keywords: Higher Education Students’ Loans, Higher
Education Students’ Social Support, Accessibility and Equity in Higher
Education |
1. INTRODUCTION
The 1960s and 1970s are considered the
golden age of higher education in Africa, and the demand for this level of
education by students and families tends to increase, with a majority of
families holding higher education training perceived as an opportunity to
counter social mobility.
In Mozambique, from the 2000s onwards,
there was a significant increase in the number of students, from 10,906 in 2001
to 200,649 in 2017. According to statistical data from the National Directorate of Higher
Education (2021), the country currently
has 213,930 higher education students, of which 117,340 are male and 96,590 are
female. The highest number of students is enrolled in public higher education
(128,428), and the remainder (85,502) is enrolled in private higher education.
One of the great challenges of higher
education at the global level is related to financing issues, which tend to be
much more critical in developing countries due to the various priorities in
different sectors and social domains.
The financing modalities for higher
education, either directly from the State budget or indirectly from the
diversification of social support, reveal the commitment of different
governments as a way of guaranteeing access, equity and quality training for
their fellow citizens.
Given this reality, the concern of almost
all researchers in the field of higher education funding is related to social
justice based on equity and accessibility.
So as to diversify student social
support, besides scholarships, which is a very common social support, several
countries have used loan policies to guarantee a wider range of support for
student financing and ensure more equity and accessibility.
Hauptman (2007) states that the
combination of non-reimbursable support (grants or scholarships), which rely on
the financial needs of the student and his/her family, is generally based on
criteria of merit rather than need, while reimbursable support (including a
wide range of student loan agreements) is a key issue for policymakers in
determining the government’s role in helping students and families pay higher
education expenses.
This tendency to combine reimbursable and
non-reimbursable social support emerges, according to Barr (2005), from the contribution
of economic theory, inasmuch that most students are not able to pay for higher
education expenses, which creates the conditions to solve this via the
well-planned student loans, making, in this case, according to Hauptman (2007), a
mix of scholarships, loans and work-study.
This study seeks to reflect on the
student loan theories, which are a practice in various contexts at the global
level as one of the alternatives of social support to students subsidized by
the State, without neglecting the groups pro and against the loan in higher
education financing. It also seeks to put forth, based on empirical data, how
loans to pay for studies in higher education take place in the Mozambican
context, even though it is not one of the State’s social support policies for
the case of Mozambican students, specifically in the province of Gaza.
2. Methodology
This study was carried out
in the province of Gaza, Mozambique. This province currently has seven higher
education institutions (HEIs), which are 13% of the total number of HEIs in
Mozambique. In 2018, when the empirical data were collected, the province of
Gaza had 10 HEIs, of which three were public and seven were private. The HEIs
in the province of Gaza are binary (universities and polytechnics) and have
different funding policies, even in public HEIs. The empirical research was
carried out in February and March 2018, and eight HEIs, three public and five
private, participated. A questionnaire survey was used to obtain data from
students about the sources of financing, with the loan being one of the
sources. These data were complemented with theoretical information, which
enable understanding the types of loans practised in Mozambique by students
vis-a-vis student loans practised in other contexts that rely on State support.
The questionnaire survey model used in this study has been used in
international studies on cost-sharing, such as the CESTES project – Cost of the
Higher Education Student in Portugal (CESTES I in 2010/11; CESTES II in
2015/2016). The survey model underwent an a priori validation process, which
consisted of applying it to 30 public and private higher education students in
the province of Maputo to test whether the survey model was in good condition
for implementation in the Mozambican context.
Based on the stratified
probability sampling method, 607 higher education students were surveyed, the
largest number (83%) belonging to the Gaza province, where the field research
was carried out. The students covered by the study come from the three regions
of the country, North, Centre and South. Of the students surveyed in the
sample, 53.8% (the highest percentage) are female, whereas 46.2% are male.
Regarding the students’ age, most students (71.7%) are between 21 and 30 years
old, while 28.3% of students are over 30 years old.
3. Literature review
3.1. Student loans: An alternative to social support for higher education students
In his
notes on Higher Education Financing in the Medieval Period, Usher (2017) sustains that the history of the tradition of
providing support to needy students through scholarships is as old as the
universities themselves. The concept of lending money to students, both
commercially and in the form of grant rates, is also a very old practice.
In the 13th
century, when student loans were made by “local sharks”, they were considered
predatory to the point that King Henry III lowered the interest on these loans.
To keep students away from such lenders, Oxford encouraged the creation of
donations whose proceeds could be used to provide interest-free loans to
students.
However, it
is important to mention that several authors, such as Chapman (2005), Teixeira
(2006), and Cerdeira
(2008), have ascribed this idea of student loans to the
economist Milton Friedman as the pioneer of issues related to them.
For Teixeira
(2006), Friedman, through the effective rhetoric of his
“Capitalism and Liberty” (1962), launched the contemporary debate on the role
of markets and governments in higher education.
As can be
seen in the writings of the economist Friedman
(1955), For vocational education, the
government, this time however the central government, might likewise deal
directly with the individual seeking such education. If it did so, it would
make funds available to him to finance his education, not as a subsidy but as
“equity” capital. In return, he would obligate himself to pay the state a
specified fraction of his earnings above some minimum, the fraction and minimum
being determined to make the program self-financing. Such a program would
eliminate existing imperfections in the capital market and so widen the
opportunity of individuals to make productive investments in themselves while
at the same time assuring that the costs are borne by those who benefit most
directly rather than by the population at large (p. 14).
Even if
indirectly, the thoughts of the economist Milton Friedman were, according to Chapman (2005), developed as a possible answer to the problem of
the capital market regarding the financing of education. However, it was not
until the 1980s that arrangements began to be adopted to reach the stage of the
current type of financing with loan characteristics.
For this
purpose, several countries, including European, American, Asian, African and
Australian, have implemented the student loan system. Furthermore, some
organizations, such as the World Bank and banking organizations, have given and
continue to offer their contribution to the implementation of the loan policy.
Information
from ICHEFAP
(2007) used by Vossensteyn (2009) shows that Because of
limited public funds and a growing emphasis on the private returns to higher
education, the 1990s have witnessed a trend towards the introduction of student
loans in countries where they did not exist before. For example, France (1991),
Hong Kong (1998), Hungary (2001), Poland (1998), Slovenia (1999), India (2001),
Egypt (2002), Kenya (1991), South Africa (1994), and the United Kingdom (1991)
have introduced student loans (p. 178).
In the
United States, student loan programs began in 1965 as a way of providing
supplemental help to students who could not attend college or would have to
work excessively in school Williams
(2006).
The
implementation of loan programs in developing countries had the support of
international organizations, such as the World Bank in the late 1990s and early
2000s, including in Indonesia, Namibia, Nepal, Mexico and Rwanda Chapman. (2005).
The
objectives in the implementation of loan systems differ, as clarified by Ziderman
(2002), from case to case, and the difference will
somehow influence the design and functioning of the system as a whole, as well
as its financial sustainability.
The author puts
forth the following five objectives, each of which can incorporate more than
one objective: (i) budgetary objectives (income generation); (ii) facilitate
the expansion of higher education; (iii) social objectives (improving equity
and access for the poor); (iv) satisfy specific labour needs; and (v) alleviate
the financial burden on students.
Thus, according
to the author, the evaluations of loan schemes can provide information on the
degree of success attained in meeting the defined objectives.
Loans can
be public, as is the case, for example, in France, where they are financed by
the Ministry of Education and managed by a university centre with some
exemption from interest and long repayment periods. Loans can also be private,
with the support of banking organizations Chevaillier and Paul (2008).
Taking into
account the objectives and the differences in the types of loans, which can be
public or private, a reflection follows on the possible challenges of loans in the
various contexts.
3.2. Current challenges in student loan systems
Following Chapman (2005), it is widely known that the financing of higher
education entails uncertainty and risk regarding the future economic fortune of
students, and there is a reluctance on the part of banks to provide loans due
to the absence of guarantees. The risk occurs, according to Chapman
and Ryan (2003), because unlike the housing loan, which, in the
event of default, the bank has something to sell, the education loan does not
offer the same guarantees.
This
implies that, without State assistance, banks will not be interested in
underwriting investments in human capital and, consequently, it can be a
regressive system for several reasons: loss of talent; a huge cost to society
as a whole; loss of opportunity for individuals; possible horizontal social
mobility.
This is why
most student bank loan programs around the world are government-assisted, in
which they commit to repaying the loan if the borrower is unable to do so due
to unemployment, illness or death Woodhall
(2004); Chapman
and Ryan (2003).
This
government intervention emerges as a solution to the capital market problem or
market failure presented by several authors Teixeira
(2006); Woodhall
(2004); Chapman
and Ryan (2003); Chapman (2005).
One of the
problems of this agreement, according to Woodhall
(2004) and Chapman
and Ryan (2003), is that it can somehow encourage the borrowers’
dropout and, furthermore, prevent banks from pursuing them because of government
guarantees.
In general,
statistics, according to the same authors, have shown that the average dropout
rate has been between 15% and 30%, and in countries such as the United States,
the rate is as high as 50%.
Williams
(2006), in a study entitled Debt Education: Bad for the Young, Bad for America, shows that in the
loan system, in its first twelve years, from 1965 to 1978, the amounts borrowed
were relatively small, largely because the University education was
comparatively cheap, especially at public universities. In the early 1990s, the
program grew immodestly, corresponding to 59% of the highest educational financial
support the government offered, surpassing all grants and scholarships.
For the
author, the excess or accumulation of indebtedness among students went beyond a
way of financing the university in order to create social well-being, but it
became a mode of pedagogy. It implicitly entailed a shift in the conception of
higher education from a public good to a private good, breaking the
intergenerational pact of the social welfare university.
This
thought is also shared by Zeleza
(2016) when he mentions that debt from loans teaches
students that higher education is a service to the consumer, promoting
careerism and the primacy of the capitalist market. It also teaches that the
role of government is to serve the market, not the public interest, and a
person’s worth is measured according to one’s financial potential rather than
the content of a person’s character. Moreover, the culture of debt has
instilled high levels of stress and a fear-of-failure sensitivity.
In addition
to these matters that are structural in the issue of loans, nowadays, and even
though many countries have joined, as stated by Ziderman
(2002) and Woodhall
(2004), government-supported student loan programs are in
place in about 50 countries.
Cerdeira
(2008) emphasizes that student loans have been designed
in several countries to accommodate, as much as possible, two characteristics:
the socio-economic conditions of the countries and of the students who aspire
to attend higher education, and the universal availability, that is, any
academically prepared student should be able to study and have access to a
loan.
Therefore, Ziderman
(2002) maintains that the analysis of the functioning of
the regimes of each country reveals a considerable variation from one program
to another, defying any attempt to identify common or even better practices.
According to the author, some schemes are available to students from all
university sectors (both private and public), whereas others are restricted to
students enrolled in institutions from the public sector.
In addition
to the market failure, which is one of the major problems at the institutional
level, as already mentioned, for the student support system through bank loans,
Chapman
and Ryan (2003) show that the
other problem arises on the part of students, one the one hand because some are
reluctant to borrow due to fear of not meeting future payment obligations, with
concomitant damage to the reputation of a person. On the other hand, potential
students may not be prepared to take out bank loans, in part because banks are
not sensitive to the borrower’s financial circumstances related to default
risk.
Besides
market-related issues, loans also deal with cultural issues, which, according
to Usher (2018), need to be solved, as it is very common in
Islamic cultures not to like the idea of remunerated debt.
For
example, in a survey commissioned by the author in Indonesia on attitudes
towards debt, many participants responded that they would not take out student
debt but would make other types of debts to purchase o housing, transport and
other goods.
For this
particular case, Vossensteyn (2009) states that this requires a lasting strategy, with
clear information on the lifetime costs and benefits of higher education and
the government’s guarantee that students will not be impaired if their future
situation of employment is not good.
According
to Usher (2018), in student debt aversion, the real problem is not
the debt itself, but the value of money, and this debt aversion is more
associated with poorer students because their appreciation of the costs and
benefits of education makes them less likely to participate.
These and
other issues lead to disagreement and sharp questions about whether student
loan systems are viable or whether they can always work successfully,
particularly in developing countries. When the answer to the question is yes,
another question emerges: how to best design and manage student loan programs
effectively? Barr
(2005).
The
solution to this problem is not necessarily to reduce loans, but to reduce loan
risk. Usher (2018) sustains that income-contingent loan programs,
which allow people to suspend payments when income is low, are an important and
potential tool for the loan issues presented here.
Even so,
the loan system has been questioned by Vossensteyn (2009) in terms of to
what extent it is a social good, insofar as
Loans much more
imply a private cost than grants because student loans must be repaid. Through
loans students rather than general the taxpayers pay part of the costs of
study. But loans also include costs, such as administration, interest
subsidies, and costs of non-repayment (default) (p. 177).
Some studies on the cost and access to higher
education carried out in countries, such as Australia, to assess the impact of
one of the loan program models that is a standard for several countries, HECS
(Higher Education Contribution Scheme), has revealed, according to Chapman and Ryan (2003), [that]
neither the introduction of, or radical changes to, HECS have had major effects
on the average financial attractiveness of a university education, which
remains high. It would be reasonable to conclude from this that, in aggregate,
it is unlikely that HECS has had an important effect on the demand for higher
education. […] HECS has not been a dominant factor influencing individual
decision-making, […] for low socioeconomic status groups (p. 12).
Regarding student reactions, Vossensteyn (2009)
states that, although in many countries, student loans are “conventional loans”
in the sense that they have relatively strict repayment terms, such as a
relatively short repayment period, fixed monthly instalments and a
high-interest rate. For example, in Australia and the UK, payments are
automatically taken from the gross salary by the tax authorities, which has
caused a lot of criticism from the student unions. According to Johnstone (2005),
students would presumably always prefer that their support be non-reimbursable,
that is, that it be in the form of subsidies, in addition to low tuition,
subsidized housing and food or heavily subsidized loans.
To show some sensitivity to the loan program and its
controversies, both social and political in some contexts, Woodhall (2004)
mentions the classic case that took place in Africa, in Ghana, when students’
opposition to the introduction of loans in 1971 contributed to the fall of the
government and, in the following year, the abandonment of the loan system and
its reintroduction in subsequent years in a more interesting way, contrary to
what happened in the first experience.
Due to the challenges of loan systems as a form of
social support for students, reality has revealed that some programs are
considered highly successful, but others face enormous difficulties, and some
have already been discontinued Woodhall (2004)
As a way of improving loan programs, several proposals
have been raised, with emphasis on the case of Wellhausen (2006) who,
in the report of the conference on student loans held in Oxford on January
27-29, 2006, presented summarily the following characteristics of the loans
that he deems well designed and conceived: Loan programs had to be sufficiently
extended to all students; the interest rate must be rational; and the
reimbursement mechanism must be efficient, equitable and capable of being
implemented.
Therefore, Johnstone (2001) advocates four
main ways for the government to participate in student loans: 1. Full coverage
or at least a significant part of the risks. 2. Interest rate subsidy, or the
cost of loans repaid by the student borrower. 3. Absorb some of the costs
administered in the loan program.
4. Employ the student to collect the loan through tax.
Furthermore,
in any assessment of loan programs, Ziderman
(2002) advises that there cannot be a standard approach
to assess the effectiveness of loan schemes. A given student loan scheme needs
to be assessed in the context of the core objective(s) for which it is
intended. By contrast, equity-targeted loan schemes, designed to increase
university access for the poor, should be assessed primarily in terms of their
success in reaching these populations and the extent to which the availability
of loans increases the participation of the poor in higher education.
A study
that draws on international lessons and experiences on loans by Woodhall (2004) concluded that loans tend to work better
when combined with scholarships rather than being the only form of financial
support. The study also reveals that it is necessary to look at the conditions
of the countries in the implementation of the student loan system, particularly
in African countries. The author further suggests that whenever a loan system
is intended to be implemented in these contexts, it should be based on a
feasibility study and gradually implemented.
4. Presentation and discussion of data
4.1. Loans made by higher education students in the province of Gaza, Mozambique
Student
loans, as a state-subsidized higher education funding policy, have been sought
after by several individuals as a source of funding for higher education
studies in many countries.
However, it
should be noted that the model of student loans in Mozambique is not similar to
the specific student loan program packages that have been used in other
countries, inasmuch that Mozambique has not yet implemented the same model,
according to information from the Ministry of Science, Technology and Higher
Education, and Vocational Training (2018).
In this
case, the loans that will be mentioned here are trivial loans granted by banks
without any co-payment or guarantee from the State.
The study
sought to understand whether students, in addition to other funding sources,
such as family, salary and scholarships, resorted to loans in the financial
market to pay for their studies.
Regarding
the type of loans taken out by students, data revealed that most students state
that they have taken out other sorts of loans that, according to them, are
related to credit for housing and consumer goods. Only a few requested the loan
packages that banks promote to cover expenses related to the studies that we
name University Credit Figure 1.
Figure 1
Figure 1 Type of Loan Taken Out
(%) Source: Produced by the Authors. |
Concerning the entities where the students obtained the loans, the majority of students (53.8%) also chose the option Other. This category encompasses formal means, such as government institutions, some institutions such as Micro finance banks, and also informal means, such as Xitique[1] and personal loans.
In addition to other means, students also use
commercial banks, such as Banco
Millenniumbim, with 23.1%, Banco
Comercial de Investimento-BCI, with 19.8% and, finally, Banco Mais, with 3.3%.
The fact that many students resort to other sources of
loans to pay for their higher education studies, as shown in Figure 2 below,
may reveal that potential loan packages for students subsidized by the State would
be a positive alternative to diversifying social support for studies.
Figure 2
Figure 2 Entities
that Granted Loans to Higher Education Students Source: Produced by the Authors. |
The
teaching sector that showed the highest number of students who have taken out
the loan in various entities presented above is the Public University sector
(20%), followed by the Private University sector (17.8%). Private Polytechnic
students did not take out any loans, whereas 12.7% of Public Polytechnic
students did, according to Table 1. However, the differences between students who
took out loans and those who did not are statistically significant (χ2(3)=3,955;
p>0,266).
Table 1 Relation of the Loan Application According to the Sector and Type of Education |
||||||
Yes |
No |
Total |
||||
N |
% |
N |
% |
N |
% |
|
Public University |
43 |
20.1 |
171 |
79.9 |
214 |
100.0 |
Public Polytechnic |
15 |
12.7 |
103 |
87.3 |
118 |
100.0 |
Private University |
27 |
17.8 |
125 |
82.2 |
152 |
100.0 |
Private Polytechnic |
0 |
0.0 |
5 |
100.0 |
5 |
100.0 |
Total |
85 |
17.4 |
404 |
82.6 |
489 |
100.0 |
Source: Produced by the Authors. |
Regarding
the sector and type of education, despite having been verified in Table 1 that the largest number of students who applied
for a loan were attending the public sector, students enrolled in Private
University Education contracted, on average, loans with higher values
(87,388.00 MT) vis-a-vis students from Public University (45,576.00 MT) and
Public Polytechnic (17,487.00 MT). For Private Polytechnic education, as shown
in Figure 3, column 3, there is no indication of loans made by students.
Figure 3
Figure 3 Amount of
Loans Taken Out by Higher Education Students by Sector and Type of Education
(MT) Source: Produced
by the authors. |
As already
mentioned concerning the type of loans that students use, while it is not a
loan in the way that has been developed in many countries around the world, 30%
of the students responded that they had taken out loans to cover
tuition-related expenses, then 16% to cover transport expenses, 11% responded
to cover food expenses, acquisition of teaching materials and other means of
studies, and only 2% responded they had taken out the loan to participate in a
mobility program Figure 4.
Figure 4
Figure 4 The Reasons that Led
Students to Take Out the Loan Source: Produced by the
Authors. |
When asked whether
they would have taken out a larger loan if they could, most students (45%)
replied that they would not have. However, an also expressive percentage of
students (41%) stated that they would have taken out a higher amount. Only 14%
said that they did not know whether they would choose to ask for a higher
amount or not, as shown in Figure 5.
Figure 5
Figure 5 If I Could, I Would have Taken Out a Bigger Loan Source: Produced by the Authors. |
Regarding
the students who answered not having taken out a loan, there are several
reasons for that; among them, they did not feel the need to do so (44.4%), they
were not in financial conditions to do so (30.4%), and they feared getting into
debt (31.8%) Figure 6.
The issues
related to the fear of indebtedness from loans have been put forward by several
authors, namely Usher (2018), Vossensteyn (2009), and Barr
(2005), as previously stated. However, as a way of
minimizing these constraints, some authors, such as Vossensteyn (2009), advise making it very clear to students/families
from the beginning of the process, depending on the type of loan, especially
when it comes to state-subsidized loans, that they will not have to worry about
paying until they have a source of income.
Figure 6
Figure 6 Reasons for not Having Taken Out a Loan Source: Produced by the
Authors. |
Most students
who stated they did not need a loan to pay for their studies are enrolled in
the private higher education sector (56.5%) versus 38.7% in the public sector.
The majority of the students who were not in a financial position to ask for a
loan are enrolled in the public sector (33.3%) against 25.2% in the private
sector. Most of the students who were fearful of incurring debts are also enrolled
in the public sector (35%) compared to the private sector (26%) Figure 7.
Figure 7
Figure 7 Reasons for not Having Taken out a Loan Source: Produced by the
Authors. |
Thus, the
loans taken out by students in Mozambique are loans without State co-payment, unlike
other countries that have loan policies specifically for university students. This
attitude of students to resort to commercial loan modalities to pay for their
studies should lead to a reflection on a possible introduction of the specific
loan modality to support students who want to pursue their studies after concluding
secondary school. This could broaden the range of funding sources for higher
education in Mozambique besides scholarships.
Information
from the report on the implementation of reforms in the financing of higher
education in Mozambique reveals that the establishment of a student loan scheme
in Mozambique is still in the research and pre-project stage; student loans
will come into operation once the project is tested Fonteyne
and Jongbloed (2018).
However,
its implementation should take into account the experiences reported in studies
carried out in different contexts so that its introduction is appropriate to
the economic and social context of the country and the families.
Loans in
the context of African countries are already a reality, according to data from ICHEFAP (2007), in a comparative study of cost-sharing programs, which indicates that
student loans started in some African countries in the 1970s and early 2000s,
according to Table 2.
Table 2
Table 2 Cost-Sharing Program in Some Countries on the African Continent |
||
Countries |
Cost-sharing
policies |
Student
loan program |
Ethiopia |
Dual
tuition fee teaching: enrolment tuition, housing and food covered by regular
students. After-work
education: students pay all expenses. |
In 2003,
the Australian model loan program began. |
Kenia |
Tuition
fees, housing and food fees were introduced in 1992, but the tuition fee was
reversed due to disputes. Dual fee courses started in 1997 at the University
of Nairobi. |
A
comprehensive loan program was introduced in the 1970s but failed without
recovering values. The program restarted in 1995 with a Higher Education Loan
Board with greater self-sufficiency vis-a-vis the first program. |
Tanzania |
Cost-sharing
officially started in 1992 but at a slow pace. Maintenance allowances,
housing allowances, and food were reduced in the mid-90s. It also introduces
dual-rate tuition teaching. |
Introduction
of a loan scheme implemented in 1993-94 as part of phase II of cost-sharing
to cover a portion of housing and food costs. As of 2003, no interest rate,
no collection strategy and no recovery of values were stipulated. |
Uganda |
The
University of Makerere is famous for being aggressive and successful in its
teaching dual-fee system, with over 75% of students paying a fee, which has
brought financial benefits to the institution. |
Under
discussion: no operational student loan program since 2003. |
Botswana |
Limited
cost-sharing measures were introduced in 2002-3, along with efforts to
improve loan collection. |
Under
discussion: no operational student loan program since 2003. |
South
Africa |
Tuition
fees and cost-sharing have fees ranging from US$1000-3500. |
An
income-tested loan program collected by employers. It reaches around 20% of
the student population, 2% real interest, and repayment is 3-8% of income
above the threshold. |
Ghana |
Cost-sharing
is limited to small fees for housing and food usage, with no tuition fees. |
After the
collapse of the 1970s plans, a new scheme was put in place in 1988. High
subsidies and difficulties in collecting values persist. |
Nigeria |
The
government expects 10% of costs to come from other income sources, but
cost-sharing is controversial, with nominal fees for housing, food and
monthly tuition at state – but not federal – universities. |
As in
Ghana, the Student Loan Board failed to collect and was suspended in 1992. A
new bank is building measures to increase collections and interest rates. |
Burkina Faso |
Despite
the French-speaking tradition of no fees, the country began cutting back on
donations and starting with a modest tuition rate in the 1990s: an increase
from about US 12 to 24 in 2003, which brought strong student opposition. |
Small
loan program. Resource-tested loans managed by Prets FONER[2], started in 1994 for 2nd
and 3rd cycle students. Subsidized and contingent income of 1/6 of
salary. With little recovery so far. |
Source: Adapted from ICHEFAP
(2007) |
As can be
seen, studies have revealed that the student loan system around the world
raises many controversies and few African countries have a solid system in
terms of organization and social acceptance.
Controversies
have also created a certain division among researchers, with groups in favour
and groups against the student loan system.
As can be
read in Cerdeira
(2008) doctoral thesis referring to Woodhall
(2004), some groups are in favour of the student loan
system and justify that they can bring some efficiency and equity. They can be
part of the burden on the government budget and taxpayers, and provide
additional resources to finance the expansion of higher education so as to
broaden access and make students aware of the costs of higher education, thus
forcing them to assess costs and benefits in light of the obligation to repay
their loans.
According
to Woodhall
(2004), those who take on an opposing stance argue that
higher education is a profitable social investment and, therefore, should be
financed by public and not private funds, due to the complexity and high costs
of administration in collecting loan repayments, the risk of non-reimbursement
for a variety of reasons, the danger of distorting students’ choices in terms
of professional careers to pursue, encouraging them to opt for high salaries
rather than study programmes or jobs that may be socially valuable but offer
prospects for low profits.
When
looking at most of the African context, the challenges become even greater.
First, because of the challenge of unemployment, which makes students take a
long time to start returning the amount spent studying; second, as a
consequence of the first, the existence of many income flows, usually informal
and often undeclared and difficult to trace, which are characteristic in
developing countries Johnstone (2003).
The other
challenge to take into account, which may go unnoticed at some point, is
related to the cultural issues that may be raised by reimbursable social
support to finance higher education, as already mentioned by Usher (2018). Studies in some contexts have revealed that
families adhere more to loans to purchase material goods and less to studies,
which are long-term investments.
This
attitude is motivated by cultural symbolic values regarding the importance
people attach to money to buy something visible or invest in something with
immediate returns. Since education is a long-term investment, people tend to
resist this type of investment, leaving it to the State to handle.
5. Conclusion
With the
need to expand the social support system, several countries have resorted to
student loan policies as an alternative. This study revealed that, despite the
already known social and economic conditions that characterize a majority of
the Mozambican population and the fears about taking out the loan shown by some
students, a significant number of students mentioned resorting to both formal
and informal financial institutions to apply for loans as a way to fund their
higher education studies.
This may
reveal some interest on the part of students and families, especially if the
loans are co-paid by the State, given that the majority of students revealed
that they use loans to defray the expenses related to studies, i.e., in the
payment of tuition fees, subsistence expenses and transport.
However,
its implementation should take into account the constraints that characterize
developing countries and that relate to the flow of income, which is generally
informal, undeclared and difficult to trace. First, it will require designing a
loan model that is affordable, considering the social and economic conditions
of most Mozambican families. Second, conditions must be created for legal
authority, equipped with the technology to keep accurate records and with
consultants and advisors who follow up with borrowers, are in charge of lending
and collecting loans and have the ability to mobilize both government
institutions that charge taxes and employers on the reimbursement of the loans.
CONFLICT OF INTERESTS
None.
ACKNOWLEDGMENTS
None.
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[1] It is a form of informal
association, in which a group of people who are usually close to each other
contribute with monetary values regularly so that each one receives all the
contributed values on a rotating basis.
[2] NatiAonal Education and Research Fund.
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