Student loans: the Western Experience and how they can be used under conditions of Asymmetric Information

Elena Savitskaya and Ilya Prakhov ()
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Elena Savitskaya: http://www.hse.ru/en/org/persons/77507

Voprosy obrazovaniya / Educational Studies Moscow, 2007, issue 1, 133-152

Abstract: The article describes the properties and components of student loans, and analyzes the role of the state as a guarantor of student loans under information asymmetry. Different ways of providing loans as well as types and elements of student loans are described. Western (American, Swedish, German, Australian) practices as well as the practice of NIS countries are presented. The second part of the article constructs a model of a contract for student loans with incentives. Based on the theory of agent relations, a way to decrease the risk of defaults on the loan is suggested. The key points are granting the student a right to delayed payments and a grace period. The model provides for the possibility of the bank to changing the interest rate depending on the academic achievements of the student.

Keywords: education funding; student loans; conditions of asymmetric information; model of a contract for student loans with incentives; theory of agent relations; risk of defaults on the loan (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprob:2007:i:1:p:133-152

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