Working Paper 51

Financing Higher Education in Vietnam: Student Loan Reform

Published January 2020

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Working Paper 51 by Dung Doan, Jiacheng Kang and Yanran Zhu examines the potential of reforming the higher education student loan system in Vietnam – a rapidly aging middle-income country – as a solution to further invest in human capital and meet the country’s evolving demand for skilled labour.

The paper finds that Vietnam’s current loan scheme not only supports a negligible number of credit-constrained students amidst rising tuition fees but can also create excessive repayment burden to debtors.

The paper then explores three potential income-contingent loan schemes and analyses how they might perform in Vietnam with respect to government subsidies and debtor’s repayment experience.

Using data from the Vietnam Household Living Standard Survey 2012-2016 and the Labor Force Survey 2016 and a recent econometric innovation that involves Copula functions to project graduate lifetime earnings, the paper concludes that it is feasible to design an income-contingent loan scheme that is both gentle on the fiscal

  • TitleFinancing Higher Education in Vietnam: Student Loan Reform
  • DateJanuary 2020
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