Thailand's student loans fund: interest rate subsidies and repayment burdens

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Author: Chapman, Bruce; Lounkaew, Kiatanantha; Polsiri, Piruna; Sarachitti, Rangsit; Sitthipongpanich, Thitima

Abstract:

Government student loan schemes typically have implicit interest rate subsidies which, while these are a cost to taxpayers, they have the benefit of diminishing repayment burdens for graduates. Our goal is to illustrate the extent of both interest rate subsidies and repayment burdens with respect to Thailand's Student Loans Fund (SLF), using methods pioneered in measurement terms by (Ziderman, 1999) and (Ziderman, 2003). Our critical innovation is to calculate repayment burdens for graduates with widely differing earnings, and we find that these generally are relatively low because the SLF is heavily subsidized. Even so, for graduates with very low income the burdens can be high. Importantly we analyze and illustrate what the repayment streams would be if the SLF was redesigned to have no interest rate subsidies and find that the burdens increase to extremely high levels for the lowest income graduates. The results are considered in the context of the analysis of income contingent loan schemes for Thailand presented in Chapman and Lounkaew (this issue).

Published abstract reprinted from 'Economics of education review', copyright 2010, with permission from Elsevier.

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Government student loan schemes typically have implicit interest rate subsidies which, while these are a cost to taxpayers, they have the benefit of diminishing repayment burdens for graduates. Our goal is to illustrate the extent of both interest rate subsidies and repayment burdens with respect to Thailand's Student Loans Fund (SLF), using methods pioneered in measurement terms by (Ziderman, 1999) and (Ziderman, 2003). Our critical innovation is to calculate repayment burdens for graduates with widely differing earnings, and we find that these generally are relatively low because ...  [+] Show more

Subjects: Finance; Higher education

Keywords: Financial aid; Educational finance; Funding

Geographic subjects: Thailand; Asia

Published: Amsterdam: Elsevier Science, 2010

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Journal title: Economics of education review

Journal volume : 29

Journal number: 5

Journal date: October 2010

Pages: pp. 685-694

Related items: TD/TNC 102.106

ISSN: 0272-7757

Resource type: Article

Peer reviewed: Yes

Call Number:
TD/TNC 102.105



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