Student loans and/or scholarships - Research Paper Example

Loans and Scholarships What specific training and content management needs does our company have? The primary need for training is based upon the foundations of loaning funds to students who are academically worthy but who will also become valuable assets in terms of payoff value. More training needs to be incorporated in the areas of “organizational setup… institutional forms of division of labor…program design, promotion activities, selection of beneficiaries, disbursements, academic supervision, loan collection, investment of cash flow and reserves, monitoring and reporting” (Salmi 2003, p.4). These are the basics for a loan guarantor, but also, due to the nature of many funding opportunities, the inevitability of failure looms much higher without proper training in each of these areas. 2. What current problems are we facing?

On an international scale, student loans and finance opportunities create a diverse range of issues in terms of what forms should be offered to students, such as “whether it should be in the form of universal or means-tested grants or bursaries, competitive scholarships, sponsorship by employers, subsidized job opportunities, or student loans” (Woodhall 2004, p. 38). In these scenarios, money is available through many channels, however the payoff from the company perspective isn’t always of value for shareholders, and more, there is an increased risk in offering universal funds for education on an international scale.

The difficulty in any one scenario is that money lending programs can be quickly abandoned as too risky due to the nature and successive difficulties that arise. On the other hand, student performance is of great concern, in that lending money to students who do poorly in their studies rarely leads to success of the program and quickly hinders economic growth from the shareholder standpoint (Canton and Blom 2004, p. 1). Thus, a compromise must be met in which students who are academically valuable are offered educational scholarships or government funding opportunities while students who wish to achieve a tertiary education are not denied admission based on their prior academic performance and instead are allowed to receive private, repayable, funding with stipulations based upon academic performance. 3. What are options for solving these problems?

The primary scenario is illustrated by Canton and Blom 2004 where they study a method “to expand the potential market, [in which] a group of about 40 private universities introduced a credit program for needy and academically talented students” (1). This scenario assumes that the students are academically efficient and will make proper use of the funding while also making the assumption that students who have not performed as academically excellent can still be granted private funds based upon their future academic performance, or at least the guarantee that they will make an effort of their education.

As Salmi 2003 notes, “because of heavily subsidized interest rates, high default rates, and high administrative costs, the repayment proportion of loans has not been very significant in most cases” (5). In order to alleviate these issues, and make student loan granting a valuable program, future repayment options focus on income contingency in which the graduate must repay a certain amount each month based upon their income. Salmi also writes that there isn’t a significant amount of data as to whether this method works for repayment, but there is enough to suggest that lenders have a better chance at receiving funds if the graduate is placed into this system of loan recovery. 4. Is a learning management system the best option?

A learning management system would be useful in certifying proper appropriations of funds to ensure students who are academically capable are granted the monies to pursue higher education while students who may be risky investments are offered different opportunities based upon their ability to excel. Specific training needs must also be met to ensure program administrators are able to properly allocate subsidies, to ensure disadvantaged students are received, and to have effective loan recovery options (Woodhall 2004, p. 48). 5.

If a learning management system would be effective, which one is the best option to meet our specific training needs? Woodhall’s article offers a large list of suggestions for training of administration and comprehension of funding opportunities and needs. Her primary focus is upon loan repayment systems including the ability to record student income levels to ensure they are not defaulting on the loan when they have the ability to repay. She writes that these “administration challenges” (49) are the single largest deterrent to repayment systems and that “better collection mechanisms” (49) are required to ensure success within funding structures.

The criteria required for judging repayment systems should be the statistics judging their efficiency. There will always be new methods and mechanisms for payment recovery; however, if students do not have the ability to repay, other options must be evaluated to reduce default rates. 6. What will be the cost of the recommended option? Salmi’s article suggests a graduated payment scheme instead of the traditional fixed repayment program which, at least in Venezuela, completely altered the repayment structure and significantly improved loan recovery.

The initial repayments are much lower than later payments, however, this program allows for more students to repay based upon their current income instead of assuming they can make larger guaranteed payments. Woodhall 2004 notes that “the United Kingdom, where the interest rate on student loans is linked to inflation, Barr (2001) estimates that for every ?100 lent by the Student Loan Company, the government gets back only ?50. Between ?15 and ?20 are lost due to non-repayment because of low income, illness, or default, but ?30 to ?35 because of the interest subsidy” (44).

Thus, while repayment programs are valuable to both the student and the loan guarantor, the money lost is considerable even with proper guarantee programs and systems in place. References. Canton, E. & Blom, A. (2004). Can Student Loans Improve Accessibility to Higher Education and Student Performance? An Impact Study of the Case of SOFES, Mexico. World Bank Policy Research Working Paper 3425, 1-45. Salmi, J. (2003). Student Loans in an International Perspective: The World Bank Experience. Education Sector Manager, Education Department, Human Development Network, The World Bank, 1-25.

Woodhall, M. (2004). Student Loans: Potential, Problems, and Lessons from International Experience. Boston College & Council for the Development of Social Science Research in Africa, 2(2), 37-51.