There is a greater burden on the government to expand access to higher education. According to the study made by Maureen Woodhall (Student Loans: Potential Problems, and Lessons from International Experience), the following the following are the highlights of the student loan:
- cost-sharing and revenue diversification by increasing the feasibility or acceptability of introduction or increases in tuition or other fees
- improving equity by providing financial support for students who might otherwise be denied access and ensuring that those who derive substantial benefits from higher education contribute to its cost
- increasing sustainability by ensuring that loan repayments from past cohorts of students help to finance financial support for the next generation
There is a need for the loans for students to spread the cost of educating a sector that requires further studies. This assistance from either the government or the private sector is important in making higher education more equitable. It is also important that loans are repaid so that the loan schemes are sustained for the succeeding generation.
The study also touched on the importance of the design and administration of student loans. The six requirements mentioned are:
- Efficient institutional management, including adequate systems for the selection of borrowers, the disbursement of loans, record-keeping, data storage, and data processing.
- Sound financial management, including setting appropriate interest rates to cover inflation, thus maintaining the capital value of the loan fund and covering administrative costs.
- Effective criteria and mechanisms for determining eligibility for loans, for targeting subsidies, and for deferring or forgiving loan repayments.
- Adequate legal frameworks to ensure that loan recovery is legally enforceable (e.g., the National Student Financial Aid Scheme Act of 1999 in South Africa)
- Effective loan collection machinery, using either commercial banks, the income tax system (as in Australia, the U.K., and several other developed countries), national insurance mechanisms (as in Ghana), or employers (as in Kenya and South Africa) to ensure high rates of repayment and to minimize default
- Information and publicity to ensure that recipients understand and accept the underlying principles and consequent obligations for the borrowing and repayment of loans.
It is important that the lending institutions meet these loan criteria so that the objectives and goals of the lending process are realized. Some are arguing that the scheme is not working in South Africa but there are real life scenarios that points to the opposite conclusion. The bottom line is the efficiency and effectiveness of the process and this has to be acted upon.