№ 3/2018

Fìnansi Ukr. 2018 (3): 67–79

FINANCIAL AND ECONOMIC REGULATION

ERFORT Olga ¹, ERFORT Irina ²

¹Donbass State Engineering Academy
²Donbass State Engineering Academy

The development of student loans in Ukraine

High tuition fees have become a serious challenge for many Ukrainian households since the mid- 90th of the last century when the private sources were introduced in the system of higher education financing. Today, the share of an annual university tuition fee in the income of an average Ukrainian household (per capita) is larger than, for example, in the USA, UK, Australia, Korea, or Japan. Student loans help to tackle the problem of financial accessibility of higher education in many developed countries, and the similar program exists in Ukraine as well. However, due to the negative real interest rates and high level of subsidies, the existing loan program has appeared to be too expensive from the point of view of public expenditure. After analyzing statistical data, the authors estimate that the existing loan program loses more than 59.4 % of its financial potential per circle. This is the key reason why it cannot be used to increase the financial accessibility of higher education. Aiming to improve the situation, the authors propose to introduce income-contingent loans (ICL) in Ukraine. The large scale of the shadowy sector in the Ukrainian economy and the lack of income transparency are considered as a serious pitfall on the path towards income-contingent loans in Ukraine. To strike the right balance between students’ interests and government financial possibilities, the authors propose to use the living wage as the benchmark for calculating the minimum amounts of loan repayments. The top amount of repayments is capped by 15 % of the graduator’s personal net income. The authors estimate the average period of loan returns and the amount of money necessary for launching such a program at the universities under the Ukrainian Ministry of Education.

Keywords:financial accessibility of higher education, loans for training, a student loan program, budgetary expenses for higher education

JEL: H52, H81, I22

Erfort O. . The development of student loans in Ukraine / O. Erfort, I. Erfort // Фінанси України. - 2018. - № 3. - C. 67-79.

Article original in Ukrainian (pp. 67 - 79)

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