VIETNAM
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Government’s student loan scheme inadequate to ensure access

Vietnam has announced that it will spend 2,500 billion dong (US$125 million) on subsidised student loans during the 2012-13 academic year, which has just begun. But this is less than a third of what the loan scheme used to provide and there are deep concerns about access.

As the country moves from an elite to a mass higher education system, the government is grappling with the problem of providing sufficient student funding to ensure equal access.

The student loan budget has failed to keep up with growth in the numbers and needs of poorer students.

One recent high-profile case involved Le Duc Duan (18) from Phu Xuyen, a poor district some 50 kilometres from central Hanoi. A student at Hanoi University of Pharmacy, he was top of his class after obtaining a score of 29 out of 30 in the nationwide examination this July.

But Duan’s widowed mother could not afford the high tuition fees and living expenses in Hanoi during the five-year undergraduate programme.

Fortunately, after the local media Dan tri reported Duan’s story in late August, he received exceptional approval to change to the Military Medical Academy, where the tuition fee would be waived. Meanwhile, a kindhearted businessman offered to sponsor Duan’s accommodation and living expenses in Hanoi.

Duan was lucky because of the publicity given to his case. But in the past month, local media reported dozens of stories about students unsure whether to pursue a degree in an uncertain economic climate.

Hundreds of thousands of students are said to be delaying attending university or are even dropping out.

The Ministry of Finance is spending 2,500 billion dong (US$125 million) on student loans for the coming academic year, as announced on its web portal on 25 September. This is a significant drop from the first five years of the loan programme, which was allocated some 40,000 billion dong (US$2 billion) – 8,000 billion dong a year.

Some 2.4 million students at public and private institution benefited in the five years to June this year from the government’s first regulation in 2007 providing low-interest (0.5%) loans. But critics say the loans have had low take-up and only a limited impact on access.

The amount allocated for student loans seems huge, said Huong Nguyen, a Hanoi-based expert on public finance reform. “However, on average each student receives only US$830 over an entire four-year undergraduate course, or US$21 a month.”

The loan provides only a fifth to a quarter of what students need to live in more expensive cities like Hanoi, Ho Chi Minh City or Da Nang, he said.

Hundreds of thousands of students do not benefit from the loan system, in many cases because they are unaccustomed to taking out loans, or are unaware of the government scheme.

Also, the government loan scheme is not the only option. In parallel, and with government encouragement, more than 20 banks are also involved in student loans.

Under one partnership, between Vietnam National University – Hanoi and the United Overseas Bank (UOB) – Singapore, UOB provides zero-interest loans worth a total of US$300,000 to cover the tuition fees of poor and other qualifying students based on academic merit.

In a meeting with UOB-Singapore representatives in April, the university’s vice-president of student affairs Nguyen Kim Son said that at least 30% of its students required some kind of financial support.

But the UOB loans go only some way towards resolving the problem of student finance, and other solutions are being looked into.

Although precise data are not available, many experts agree that the proportion of students needing financial support is about 30% to 40% of the total student body, and this proportion is likely to increase as more students from poorer households and rural areas enter higher education, and as families become more squeezed by the economic situation.

Lam Quang Thiep, a former director of higher education in the Ministry of Education and Training and an emeritus professor at Vietnam National University – Hanoi, said: “The loan amount should be higher and at the same time, tuition fees may also be set higher.”

This would “kill two birds with one stone”, he said, by tackling both access and quality problems in higher education caused by, among other things, low academic salaries and budgetary constraints on institutions.

The expansion of higher education has led to major concerns about quality.

The policy of ‘two highs’ – higher tuition fees and higher student aid – had been pursued by more than 50 countries in recent decades with “fruitful results”, said Pham Phu, a member of the Scientific and Training Council at Vietnam National University – Ho Chi Minh City.

But financial expert Huong Nguyen said things worked differently in practice. Because of the financial crisis in Vietnam, the government had problems sustaining the loans budget, he said. “Waiving tuition fees and providing scholarships for all is never a feasible mechanism if you want to build a universal higher education system,” Huong said.

In April Deputy Prime Minister Nguyen Thien Nhan promised students in Ho Chi Minh City that the government would make student loans more attractive.

A government meeting scheduled for next month is expected to take stock of the student loan programme and adjust the system for the next phase of the scheme, which is expected to last another five years.