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A student loan scheme plausibly addresses the challenge of broadening access to higher education. Of paramount concern, however, is how to design such a system that would ensure accessibility and program sustainability. Hence, a reform measure — the Unified Student Financial Assistance System for Higher and Technical Education (UniFAST) — is currently under deliberation in the 16th Congress with a Nationwide Student Loan Program (NSLP) as a specific mode of student financial assistance.

This paper evaluates the proposed NSLP according to emerging standards in international practice. It recommends Income-Contingent Loan (ICL) scheme as a possible way to minimize default considering the fact that a person’s capacity to repay his debt would depend on his actual earnings. Preconditions for success of ICLs are discussed and a benchmark ratio for a reasonable repayment burden has been proposed based on the framework endorsed by Baum and Schwartz (2005). The paper hopes to contribute to discussions on designing a better nationwide student loan program in the Philippines.>>read complete document

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