5/ WEM 2003, Lisbon, Portugal1 Student Loan Schemes: Lessons from International Experience HDNED World Bank

5/ WEM 2003, Lisbon, Portugal2 Forms of Student Aid n Scholarships n Vouchers n Tax Credits n Matching Savings Grants n Student Loans

5/ WEM 2003, Lisbon, Portugal3 Outline of the Presentation The Student Loan Landscape The WB Experience in Support of Student Loan Schemes

5/ WEM 2003, Lisbon, Portugal4 Types of Financial Schemes Mortgage Loans Fixed Payments Graduated Payments Graduate Tax (income- contingent) Tax System (Sweden / Australia) Social Security (Ghana) Tuition Postponement Option (Yale U.)

5/ WEM 2003, Lisbon, Portugal5 Funding Sources

5/ WEM 2003, Lisbon, Portugal6 Organizational Structure of Student Loan Schemes

5/ WEM 2003, Lisbon, Portugal7 World Bank support to student loan schemes

5/ WEM 2003, Lisbon, Portugal8 Reasons for Seeking WB Support n establishment of a new scheme n reform to improve an existing scheme n expansion of coverage

5/ WEM 2003, Lisbon, Portugal9 Difficulties Encountered n Demand n Coverage n Financial Viability n Targeting

5/ WEM 2003, Lisbon, Portugal10 Demand Factors n Knowledge F Awareness F Understanding n Attractiveness F Culture F Credibility

5/ WEM 2003, Lisbon, Portugal11 Funding Issues n Public Sources n Privates Funds n Financial Sustainability

5/ WEM 2003, Lisbon, Portugal12 Financial Viability n Interest Rate Subsidy n Default Rate F Repayment Schedule F Income F Collection Mechanisms n Exemptions n Administrative Costs

5/ WEM 2003, Lisbon, Portugal13 Real Interest Rates

5/ WEM 2003, Lisbon, Portugal14 Loan Recovery (Proportion of Present Value of Loan)

5/ WEM 2003, Lisbon, Portugal15 Administrative Efficiency

5/ WEM 2003, Lisbon, Portugal16 Targeting Factors n Leaking n Guarantees

5/ WEM 2003, Lisbon, Portugal17 Success Factors: Design Dimensions Good Information and Marketing System Transparent Eligibility Criteria and Selection Processes Adequate Repayment Features Solid Financial Projections & Scenarios Appropriate Follow Up Mechanisms Proper Legal Framework

5/ WEM 2003, Lisbon, Portugal18 Questions on the Polish Student Loan Scheme participation of the commercial banks access for poor students (guarantors) cost of interest rate subsidy provision for default exemptions fixed payments financial projections (viability)

5/ WEM 2003, Lisbon, Portugal19 Success Factors: Operational Dimensions Efficient Institutional Management Appropriate Financial Management Efficient Loan Recovery Stable Leadership Ability to React Rapidly to Problems

5/ WEM 2003, Lisbon, Portugal20 Performance Indicators Demand and Targeting Indicators Financial Indicators Institutional Operation Indicators

5/ WEM 2003, Lisbon, Portugal21 Demand and Targeting Indicators Evolution of higher education enrollment rate Proportion of beneficiaries from low and medium income families Gender distribution of students and beneficiaries Geographical distribution of students and beneficiaries Distribution of students and beneficiaries by academic program Coverage (number of beneficiaries over student population) Academic results of beneficiaries (compared to general student population)

5/ WEM 2003, Lisbon, Portugal22 Financial Indicators Arrears & default rates (by socioeconomic group, gender, tertiary institution, academic discipline, and amount of loan) Interest rate subsidy level Loan recovery ratio Administrative costs compared to overall portfolio (and distribution of main expense categories) Cash flow projections Evolution of real value of assets Distribution of funding sources Dependency on government resources Mobilization of non-government resource Return on investment

5/ WEM 2003, Lisbon, Portugal23 Institutional Operations Indicators Management indicators (measuring the efficiency and quality of internal processes) Satisfaction of beneficiaries Turnover of personnel Indicators of promotion of the student loan program (awareness of the program and understanding of the terms and obligations)