The Formation And Development Of The Student-Origin-Based Loans

What did education equity mean in the past? What does it mean now? And what will it mean in the future? Who should shoulder the responsibility to ensure education equity? Those questions proposed by the American scholar Mr. James Coleman decades ago are now still touching the minds of all the scholars who are now concerning with the access of needy students to education.With the development and reform of higher education, aid to needy students becomes an unavoidable problem in the massification of higher education in China. Since the implementation of Government-subsidized Student Loans (GSSL) in 1999, they have been quite a lot of improvements and revisions to the policies, which shows that the implementation of the GSSL has not been smooth. And it is even more difficult to implement the GSSL in local higher education institutions. In order to solve or just appease these problems, the student-origin-based loans began to appear in some provinces, and in rural areas, the Country Creditable Cooperative undertook this kind of loans.The student-origin-based loans were first implemented by the Country Creditable Cooperative in the form of small-size agricultural loans and gained certain support from the local governments. To some extent, the loans helped to facilitate the access to higher education for part of the needy students, so the loans did become popular with the rural households and also bring about certain impacts. Since it is comparatively easier to identify the economic status of the rural households and also to track them later on, the Country Creditable Cooperative is confident in lending and recovering the loans. However, the Country Creditable Cooperative does have difficulties in implementing the student-origin-based loans because of the following reasons: the loans can not enjoy corresponding preferential policies from the government and thus can not be considered as real"student-aid"loans; the Country Creditable Cooperative has a lot of old problems to be solved; there is no effective risk treatment mechanism for the loans; and the government is"absent"from some of the responsibilities, and so on. Moreover, as a kind of mixed goods with externality, the implementation of student-origin-based loans helped to improve the utility of both government and higher education institutions, but they did not bring about any corresponding compensation to the Country Creditable Cooperative. As a result, the development of student-origin-based loans was limited, and their social effects were also hindered.As far as the social foundation of implementation is concerned, the student-origin-based loans do not enjoy the corresponding advantages of the GSSL. In the rural areas, the informal institutions made up of morality, customs, conventions, public opinions, informal organizations, kinship and so on play very important roles in restricting and stipulating the behaviors of the farmers in their daily social and economic life. Of course, those above-mentioned items are also the"natural advantages"of the student-origin-based loans because they can greatly lower the risks of loans, and this is why Country Creditable Cooperative is willing to undertake the student-origin-based loans.However, the role of informal institutions is quite limited, and the institutional construction of the student-origin-based loans is far from sufficient, so the above-mentioned items will lead to imbalance between responsibility and benefit among all the stakeholders involved in the loans, and also the supply of student-origin-based loans can not effectively meet the needs. In a word, the present institutional system is not appropriate and thus leads to the low efficiency of student-origin-based loans. On the other hand, the student-origin-based loans also have favorable conditions: the formal institution is increasingly strengthened due to the change in social structure and the effect of market economy; after the reform in management and ownership system, the Country Creditable Cooperative is becoming more and more localized, cooperative and autonomous; the central government is trying to seeking new breakthroughs in the aiding the needy students and thus leads to the game of student-aid loans between the central and local governments; the pressing situation caused by insufficient resource and student-aid loan business needs to be solved. All these background facts are crucial to the development of student-aid loans and will turn into the development opportunities. But most important of all, it is not quite easy to grasp the opportunities to facilitate the student-origin-based loans. In this senses, these facts are both opportunities and challenges in the development of student-origin-based loans.The development of the student-origin-based loans will depend on both the external conditions and the institutional design of their development models. With the development of society and the reform in Country Creditable Cooperative, the external conditions of the student-origin-based loans will be gradually improved, of course, the appropriate institutional design is also very important and the design should get ready to meet the needs of the future development of student-origin-based loans. The detailed development design can be summarized as follows: first, a mechanism with the benefits and responsibilities of all the stakeholders involved should be established because it is the foundation to assure the smooth development of student-origin-based loans; second, a government payment transfer system should be established because the participation of both central and local government will better facilitate the development of student-origin-based loans; at last, the development model of student-origin-based loans should be designed as a complementary loan for the GSSL, and the student-origin-based loans should be provided jointly by government and financial organizations, and also combined with the relative favorable policies when the loan-recipients are willing to work in grass-root or countryside units. The above-mentioned institutional design is based on the current conditions of China; it represents the benefits and responsibilities of the government, the Country Creditable Cooperative, higher education institutions and the farmer households (the students); it is quite feasible.To sum up, only when all the stakeholders actively participate and coordinate, only when appropriate institutions are established, can the development of student-origin-based loans be facilitated. As what the Swedish education scholar Mr. Torsten Husen has said: According to the modern or even radical concept of education equity, actions should be taken in the whole society rather than just inside schools so as to ensure the long-term goals on equity in career development and life quality. In this sense, the educational reforms should never take the place of social reforms.