DEVELOPMENT OF EDUCATION LOAN MODEL IN THE HIGHER EDUCATION OF THAILAND

2 September 2016, 1:22 am

By Sudtai Chaijuntuk
Doctor of Public Administration, GSPA NIDA 2015*

Inno5

The purpose of this research is to study educational loan models for higher education in Thailand, the United Kingdom and Australia, as well as their strengths and weaknesses, and to propose educational loan models that are suitable for Thailand. Research information and tools to support the research included documents related to educational loans, in-depth interviews with administrators involved at the policy level, and interviews with borrowers of the Student Loan Fund (SLF) in Thailand. The findings of the research were as follows:1) There are two types of educational loans in Thailand. 1) the Student Loan Fund (SLF) specifying that borrowers must settle loans at a specified rate and timeframe called a “Mortgage Style Loan” and (2) the Thailand Income Contingent Allowance and Loan (TICAL), which referred to as an “Income Contingent Loan” (ICL). The loans include both tuition fees and living costs. Their strengths are that those funds are supported by laws and regulations, and the loan criteria is diverse and flexible. They are a tool of the public sector for increasing opportunities for education and competition. In the case of the TICAL, it can lessen the burden of debt for low income earners. Their weakness is there is a channel for changing the policy of politicians in each period. Additionally, no debts were collected by the Department of Revenue and a large number of people involved and the process were duplicated. Too many relaxed conditions cause repayment and collection problems. In addition, there is no information system database for the borrowers etc. 2) There are two types of loans in the United Kingdom: the mortgagestyle system or a fixed term loan for borrowers and an income-contingent loan (ICL), consisting of ICL “Plan 1” and ICL “Plan 2” for tuition fees and living costs. Their strengths are that they are income-contingent loans. This gives borrowers more accessible to loan sources. In addition, there are monitoring agencies and debt collection systems by the Office of Revenue and the Office of Customs etc. Their weaknesses are that the loans are provided to only students at the undergraduate level. It was also specified that loans will be repaid according to income and only the amount exceeding the criteria will be paid. The amount that borrowers settle towards their loans in each installment is not sufficient. The loan grant focuses mainly on the economy, with high interest rates fixed for high income earners which may lead to false disclosure of information about their income. Finally, there is no income monitoring system for borrowers who are not in the employment system. 3) Educational loans in Australia are currently income-contingent loan (ICL) and divided into five types: 1) the HECS – HELP Loan Scheme, 2) the FEE-HELP Loan Scheme, 3) the SA-HELP Loan Scheme, 4) the OS-HELP Loan Scheme and 5)the VET FEE-HELP Loan Scheme. Loans are given in terms of tuition fees and charges for student services or fees for facilitation, including expenses for some overseas courses. Their strengths are the diversity of loans which borrowers can select to suit their demand. They also provide loans for private educational institutions and vocational students. Furthermore, loan repayment is in accordance with income level, and as a result low income borrowers do not have to repay them. Those with an income must repay loans according to their income level calculated by their total income, not only the income that exceeds the criteria. This model helps borrowers with a high income can settle their loans sooner. The incentive of discounts is also given to students who pay their tuition fees in advance. A fee for fee-help loan scheme at 25% and vet fee-help loan scheme at 20% bring no risks to the Australian government in terms of collecting debts amongst these groups. The determination of interest rates in relation to the index of retail prices will not cause too much burden for borrowers and is consistent with economic conditions etc. Their weaknesses are that there are risks in the loan settlement of borrowers with a low income in the future. This may cause a burden to the public sector. Finally, loan settlement depends mainly on economic conditions because the interest rates are based on the index of retail prices