2014-05-29
The state-sponsored student loan scheme helps to save the public money
An ongoing discussion in public space about the student loan scheme – its benefits, obligations for the state and borrowing conditions for students – prompted an audit to determine whether the state-sponsored student loan scheme increases the access to higher education and allows saving the public money.
Over the period 1998-2013, students were receiving state loans from the public money for the payment of the tuition fee; in 2003-2009, loans were also granted to cover living costs and costs of part-time studies abroad, in addition to the said loans. The funding source for student loans changed in 2009 – state-sponsored loans are now granted from funds of credit institutions. "The changes in the student loan conditions increased the opportunities for students to get these loans, but we cannot say that the access to higher education increased as well. The audit also showed that it is currently efficient for the state to provide loans from funds of credit institutions, however, assessment of the long-term risk of increase in public spending should be ensured,” said Auditor General Giedrė Švedienė summing up the audit results.
The audit revealed that the conditions of state-sponsored loans currently granted from funds of credit institutions are more favourable than those which used to be given from the public money until 2009, because now loans are available to all students and more funds are provided for the loans. On the other hand, however, the deferment and repayment terms for state-sponsored loans are less beneficial for students than the terms for loans from state funds, because the repayment of loans granted by credit institutions starts sooner, the repayment may be deferred only in case of low income and may not be deferred if the student continues studies of the same or a higher level.
In public auditors’ opinion, the monitoring of the access to higher education carried out in the country is insufficiently systematic and comprehensive, so education policy-makers do not have enough evidence on the impact of state-sponsored loans on the access to higher education.
The audit also found that the granting of state-sponsored loans from funds of credit institutions reduced the administrative burden of the State Studies Foundation and schools of higher education, loans are now issued more quickly, so such loan scheme is efficient for the state. However, the Ministry of Education and Science does not ensure forecasting loan repayment trends over the long term, thus failing to make a proper evaluation of the risk of increase in public expenditure.
The National Audit Office made recommendations to the Ministry of Education and Science to help manage detailed information about the impact of student loans on the access to higher education and properly assess the risk of increase in public expenditure for state-sponsored student loans.
Executive summary of the public audit report: Study loan scheme 