Student Loan has been a focal point in efforts to support students in realizing their educational dreams. In Indonesia, the concept of student loans is still under consideration for implementation. What exactly is a student loan? Let's delve into the concept of student loans, their benefits, and how they are gaining attention in Indonesia.
1. What Is Student Loan?
1.1 Borrowing Money from Banks for Students
Student Loan is an educational loan system that enables students to access funds for their education. In this context, there are two types of educational loan systems: mortgage loans and income-based loans.
1.2 Mortgage Loans
The first type is mortgage loans, which have predetermined repayment periods. These loans often result in significant repayment burdens, especially for individuals with low incomes, carrying the risk of default. This loan model is commonly used in several countries, including the United States, Canada, the Philippines, and Thailand.
1.3 Income-Based Loans
Meanwhile, the second type is income-based loans. In this case, borrowers have the ability to repay the loan once their income reaches a certain level. In this type, the payment duration is not initially fixed, mitigating the risk of default to some extent. Such models are generally implemented in several countries, including Australia, Sweden, the United Kingdom, and Germany.
2. History or Origin of Student Loans
The history of student loans has deep roots, originating in the Middle Ages and taking us through crucial developments in the higher education system.
2.1 Originating from the University of Bologna, Italy
The concept of student loans first appeared at the University of Bologna, Italy, an institution recognized as the oldest in the world. At that time, this loan scheme laid the foundation for student loan systems later adopted by other prestigious universities in Europe, including the University of Paris, Oxford University, and Cambridge University.
2.2 Officially Recorded in 1240
In 1240, Bishop Lincoln, Robert Grosseteste at Oxford University, created a student loan scheme officially recorded in history as St. Frideswide's Chest. This step provided a formal basis for the development of student loans.
2.3 First Country to Implement Student Loan
In the 20th century, the national implementation of student loan schemes began. Colombia made history as the first country to enforce a national student loan scheme in 1951. This initiative marked the starting point for recognizing the importance of higher education and the financial support provided to students.
Australia also played a significant role in the history of student loans. In 1989, the country reintroduced the concept of student loans as a step to support the expansion of higher education. Previously, in 1974, Australia had abolished the student loan scheme but reinstated it considering the need to broaden access to higher education.
The history of student loans reflects the evolution of the higher education system and the crucial role played by certain countries in providing financial support to students. From the University of Bologna in the Middle Ages to the progressive steps in Colombia and Australia in the 20th century, student loan schemes continue to evolve to meet the demands of increasingly complex education.
3. Student Loans in Indonesia
3.1 Catching the Attention of President Joko Widodo
Although student loans are not officially present in Indonesia, in 2018, President Joko Widodo encouraged banks to develop student loans in Indonesia, similar to those in the United States. He highlighted the difference between education loans in the US, amounting to $1.3 trillion, and consumer loans at only $800 billion.
3.2 Deep-Dive Study Underway
Currently, the Indonesian government is conducting an in-depth study regarding the implementation of student loans. Finance Minister Sri Mulyani stated that they need to consider the affordability of loans to avoid burdening students and prevent potential issues observed in other countries.
According to a study by the SMERU Institute, the concept of student loans is highly feasible in Indonesia. The student loan concept with a mortgage loan approach applied in the United States may not be suitable for Indonesia. Indonesia is better suited to implementing a student loan concept based on income, as has been applied in the United Kingdom.
Additionally, the SMERU Institute added that the student loan concept in Indonesia can run smoothly if it adopts a no-interest loan scheme distributed through the LPDP endowment fund. This scheme has lower risks of default compared to online loan schemes.
4. Benefits of Student Loans
4.1 Changing the Image of Higher Education
Essentially, a Student Loan refers to borrowing funds for students deemed in need of assistance. This helps change the image of higher education, making it more open and accessible to various segments of society. With student loans, education can be seen as something attainable by anyone.
4.2 Increasing Enrollment Rates
Fundamentally, the functioning of student loans helps students secure funds for their education. With the availability of educational loans, the student participation rate can increase, as the availability of funds is no longer a major barrier.
4.3 Improving the Quality of Education in Indonesia
With a significant number of new students potentially benefiting from education, there will be an improvement in the overall quality of education. The influx of new talents will make them better understand the learning process, enabling them to implement it in real life. Thus, in the future, there is an expectation of curriculum development and increased knowledge.
Therefore, the introduction of student loans in Indonesia not only provides greater access to higher education but also has the potential to enhance the overall quality of education. Although still in the study phase, this initiative represents an innovative potential that can have positive impacts on the future of education in Indonesia.
We hope this article provides a clear overview of the concept of student loans. Currently, BFI Finance, as a multi-purpose lending institution in Indonesia, does not provide student loan facilities. BFI Finance primarily serves loans with motorbike and car BPKB collateral, conventional and sharia housing/office certificates for various productive and consumptive purposes such as business development, home renovation, investment, children's education funds, etc
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