Academic journal article Higher Education Studies

The Success of Students' Loans in Financing Higher Education in Tanzania

Academic journal article Higher Education Studies

The Success of Students' Loans in Financing Higher Education in Tanzania

Article excerpt


Students' loans in financing higher education in Tanzania have been subjected to many researches. However, less information is available on how the success of students' loans in financing higher education can be revealed. Therefore the purpose of this study is to examine the factors indicating the success of students' loans in financing higher education in Tanzania.

Using data collected from a larger cross sectional survey in Tanzania, this study found that students loans in financing higher education in Tanzania is successful as it increases enrollment of students in higher learning institutions, the study also revealed that Higher Education Students' Loans Board (HESLB) is employing enough efforts to recover loans granted to loans beneficiaries since 1994 as well as the guidelines and criteria for granting loans was found to be satisfactory.

The study recommend that, enrollment decision making has been affected by other factors other than a successful students' loan financing, these factors includes political factors, economical factors, family influences and school impacts. Therefore for better understanding of the successful students' loans financing in Tanzania these factors need to be considered too. To ensure more effective recovery of already issued students loans since 1994, HESLB is recommended to institute a sound financial management which include setting appropriate interest rates to cover inflation in order to maintain the capital value of the loan fund and covering administrative costs as well as presence of adequate legal framework to ensure that students' loans are legally enforceable to reduce default among loan beneficiaries. Guidelines and criteria should be improved to be more effective such as the inclusion of economics factors to measure the economic ability among loans applicants for instance presence of collateral security.

Keywords: students loan, higher education, repayment, enrollment, guideline and criteria

1. Introduction

Students' loan programmes now exist in many developed and developing countries. Examples of student loan programmes which are financed from public funds or backed by government guarantees, were found in Japan, Scandinavia and the U.S.A., where the idea of students borrowing from government funds to finance higher education dares from the 1940s and 1950s (Woodhall, 2007). Other developed countries set up loan programmes in the 1960s, including Canada and several European countries.

The first developing country to establish a student loan programme was Colombia, where the Instituto Colombiano de Credito Educativo y Estudios Technicas en el Exterior (ICETEX) was established in 1953, and it was followed by many other student loan programmes in Latin America in the 1950s and 1960s, (World Bank, 2008a). By early 1980s student loan programmes were established in Europe, North America, Latin America, the Caribbean, and few isolated examples in Africa and Asia. A review of international experience of student loan programmes found official loan programmes that are run by government agencies or backed by government guarantees in more than thirty countries, (World Bank, 2008b). Loan have recently been proposed in several other countries, including the U.K., and New Zealand among developed countries, and Tanzania, South Africa, Kenya, Uganda among the developing countries.

The plan of this paper is as follows: Section 2 will cover the literature review, section 3 will be on the methodology used in the study, section 4 will cover the findings and discussion, section 5 will cover the conclusion and recommendations and section 6 will indicate the limitations and directions for the future research.

The purpose of this paper is to examine the students' loan in financing higher education in Tanzania by considering how the students' loans programme is successful in financing higher education. In light of the theoretical debates about students loans the paper examines the increase in the enrollment of students in higher learning institutions as a result of availability of students loans, repayment of the borrowed fund to make fund available to be re lend to other needy students and the presence of effective and sound eligibility criteria and guidelines for granting loans as the key factors for a successful students' loans in financing higher education students in Tanzania. …

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