Higher Education Finance: Lessons from International Experience

August 1999

Higher Education Finance - Lessons from International Experience

This paper sets out key issues and questions for Hungarian policymakers in making choices about the design of a student loan scheme within the broader context of a reformed system of higher education finance. The opening section considers a range of objectives, section 2 discusses key lessons from economic analysis, section 3 the lessons from international experience, and section 4 considers the overall lessons – for policy, for principles of policy design and for sequencing. The concluding section lists the central questions, broadly in the order in which they need to be answered.

The emphasis of the paper is deliberate. First, it focusses on questions rather than on giving specific answers. Second, its coverage is broader than the design of student loans, since it is desirable if choices about loan design are made within the broader context of higher education finance and with some idea of the longer-term shape of the system. For example, the design of student loans will be very different if it is contemplated that students – now or in the future – will have to pay tuition fees, and on whether or not those fees are (or might be) different at different universities. A third aspect of the paper is to be selective – about the countries discussed (the USA, the UK, the Netherlands, Sweden, Australia and New Zealand), and about the details of their systems. The intention is to give only as much detail as is needed to show the patterns.

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