Repayment burdens of student loans for Vietnamese higher education

• We derive repayment burdens (RBs) for a hypothetical loans system for urban and rural Vietnam with respect to two loan sizes.
• We use the unconditional quantile model to allow variations of RBs across the income distribution of graduates by age/sex.
• Poor graduates face very heavy/extreme RBs respectively for loans covering tuition/tuition plus income support.
• Even relatively rich graduates living in the highest income areas will face RBs which are over 20 per cent for large loans.
• An alternative loan system that accounts for borrowers’ repayment capacity is critical for Vietnam's higher education.

Expansion of high education in Vietnam will be undermined without an effective student, loans policy to assist with tuition and living costs. We show the significance of this issue is by, constructing a hypothetical loans system and calculating repayment burdens (RBs) (the proportion of, a graduate's income required to repay the debt) for male and female in four different parts of Vietnam, and with respect to two levels of loans. Importantly, the exercises examine RBs across the whole, distribution of income using unconditional quantile techniques. We find that RBs involving loans for, tuition only are likely to lead to significant RBs for poor graduates, with much higher loans being, associated with critical financial difficulties for perhaps the majority of debtors. This will result in high, default rates and consumption difficulties for borrowers, implying strongly that a student loan system, with such high RBs is unlikely to be successful in Vietnam.