1. Student Financing Informal Presentation to World Education Market Workshop 21 May 2003 with European Investment Bank by Ron Perkinson International Finance Corporation Washington DC

2. IFC Student Financing Projects Student financing – private schemes are more recentStudent financing – private schemes are more recent 2 projects to date * India * South Africa2 projects to date * India * South Africa Technical Assistance – institution-based schemesTechnical Assistance – institution-based schemes

3. Some Issues For IFC Banking sector experience – experience & performance of consumer/ individual credit – consumer/ individual lending systems and processes Cost of credit – local interest rates – affordability of loan repayments vs. GNI per capita Who takes the risk? – Sponsors – first loss – local bank? – IFC – other risk levels

4. Structuring The Risk Who Participates?  Education Institution – First loss – Debt admin and support systems  Student Loan Facility (lending banks) – local bank – also first risk – Security (Guarantees? Funds?) – Structuring risk sharing  The Student – Incentives (discounts vs. penalties) – Alumni benefit?

5. IFC Participation Guarantee – any currency Technical assistance Structuring – securitization and investment Loan – in selected currencies Cap or limit financial exposure

6. Why Some Student Loan Schemes Can Perform Poorly  Inadequate underwriting criteria  Difficulty in servicing loans across borders  Mobility of Students  Government sponsorship – (social resistance to pay back)  Poor servicing and systems