History of Student loan in Timeline

Student loans are financial tools designed to assist students in covering the costs of higher education, encompassing tuition, materials, and living expenses. These loans often feature lower interest rates and deferred repayment schedules compared to standard loans, allowing students to focus on their studies. However, student loans are often subject to strict regulations regarding renegotiation and bankruptcy in many countries. The financial risk associated with student loan defaults can be borne by the educational institution itself. The landscape of student loan systems varies significantly across different nations.

1969: Introduction of Loan Scheme

In 1969, the loan scheme for Hong Kong students was introduced. This scheme aimed to help full-time students at two universities: the Chinese University of Hong Kong and Hong Kong University.

1976: Loan Program Extended

In 1976, the Hong Kong student loan program was extended to cover full-time students in the Hong Kong Polytechnic.

1982: Loan Program Extended

In 1982, the Hong Kong student loan program was further extended to cover post-advanced level students in the Hong Kong Baptist College.

1984: Loans Expanded to New Polytechnic

In 1984, loans were expanded to include students in the new city Polytechnic in Hong Kong.

1990: Introduction of Student Loans in the UK

Between 1990 and 1998, in the introductory phase of student loans in the UK, repayments were not collected through the tax system.

1990: Establishment of Student Financial Assistance Agency

In 1990, a new government office, the Student Financial Assistance Agency, was established in Hong Kong to coordinate the administration of the student loan scheme.

1998: Introduction of Student Loans in the UK

Between 1990 and 1998, in the introductory phase of student loans in the UK, repayments were not collected through the tax system.

1998: Student Loan Repayments Collected by HMRC

Since 1998, in the UK, Her Majesty's Revenue and Customs (HMRC) has collected student loan repayments via the tax system, calculated based on the borrower's current income level.

2002: Public Spending on Education Dropped

Between 2002 and 2012, public spending on education dropped 30%, while total enrollment at public colleges and universities jumped 34%.

2005: Bankruptcy Reform Bill Passage

After the passage of the bankruptcy reform bill of 2005, even private student loans are not discharged during bankruptcy, providing a credit risk free loan for the lender, averaging 7 percent a year.

2005: Changes to Bankruptcy Laws

In 2005, bankruptcy laws were changed so that private educational loans also could not be readily discharged, with supporters claiming it would reduce student loan interest rates and critics arguing it would increase lender profits.

2007: Investigation into Lending Practices

In 2007, Andrew Cuomo, then Attorney General of New York State, led an investigation into lending and anti-competitive practices between student lenders and universities, revealing that universities steered student borrowers to "preferred lenders" resulting in higher interest rates.

2007: False Claims Lawsuit Filed

In 2007, a false claims lawsuit was filed on behalf of the federal government by former Department of Education researcher Jon Oberg against Sallie Mae, Nelnet, and other lenders.

2007: Decline of Median Family Income

The median family income had a steady decline each year since 2007 up until 2012, it saw increasing difficulty for students to pay back college tuition out of savings and labor income.

May 2009: Establishment of Korea Student Aid Foundation

In May 2009, the Korea Student Aid Foundation (KOSAF) was established to manage student loans in South Korea, aiming to support talent development and ensure students are not hindered by financial constraints.

2009: Education Loan Growth Rate Projection

In 2009, the education loan sector was expected to grow at a rate of 32.3 percent.

August 2010: Nelnet Settles Lawsuit

In August 2010, Nelnet settled a false claims lawsuit for $55 million, which was filed in 2007 by former Department of Education researcher Jon Oberg, who argued that Nelnet and other lenders overcharged the U.S. government.

2010: Education Loan Growth Rate Projection

In 2010, the education loan sector was expected to grow at a rate of 39.8 percent.

2010: Federal Student Loan Program Profit

In 2010, the federal student loan program in the US ran a multibillion-dollar "negative subsidy", or profit, for the federal government.

2010: Elimination of Guaranteed Lending Program

In 2010, the guaranteed lending program for federal student loans was eliminated. Prior to 2010, these loans were originated and held by private lenders but guaranteed by the government.

2011: Education Loan Growth Rate Projection

In 2011, the education loan sector was expected to grow at a rate of 39.8 percent.

2011: Income Threshold for Student Loan Repayments

In 2011/2012, in the UK, if a borrower's income was below £15,000 per tax year, no student loan repayments were required, although interest continued to accumulate.

2012: Public Spending on Education Dropped

Between 2002 and 2012, public spending on education dropped 30%, while total enrollment at public colleges and universities jumped 34%. The median family income had a steady decline each year since 2007 up until 2012, it saw increasing difficulty for students to pay back college tuition out of savings and labor income.

2012: Education Loan Growth Rate Projection

From 2012 to 2014, the education loan sector was expected to grow at a rate of 44.8 percent.

2012: Income Threshold for Student Loan Repayments

In 2012/2013, in the UK, if a borrower's income was below £21,000 per tax year, no student loan repayments were required, although interest continued to accumulate.

2013: Predictions of Economic Crisis

As of 2013, many economists are predicting a new economic crisis will emerge as a result of an estimated $1 trillion of student loan debt currently impacting two thirds of graduating college students in America. However, most economists and investors believe that there is no student loan bubble.

2013: Income Threshold for Student Loan Repayments

In 2012/2013, in the UK, if a borrower's income was below £21,000 per tax year, no student loan repayments were required, although interest continued to accumulate. The information is valid in 2013 too.

2013: Sale of Early Student Loan Portfolio

In 2013, The Department for Business, Innovation and Skills sold a portfolio of early student loans from the 1990s. Erudio, backed by CarVal and Arrow Global, was established to manage these accounts after successfully purchasing the loan portfolio in 2013.

2014: Education Loan Growth Rate Projection

From 2012 to 2014, the education loan sector was expected to grow at a rate of 44.8 percent.

August 2015: Vidya Lakshmi Portal Launch

In August 2015, the Indian government launched the Vidya Lakshmi portal on Independence Day for students seeking educational loans. Five banks, including SBI, IDBI Bank, and Bank of India, integrated their systems with the portal. Vidya Lakshmi was developed under the Department of Financial Services, Department of Higher Education, and the Indian Banks Association (IBA).

2019: Federal Pell Grant Amount

In 2019-2020, the Federal Pell Grant, a form of federal aid for higher education students that does not need to be re-paid, only provides a maximum annual grant of $6,195 per student.

August 15, 2020: Banks Registered on Vidya Lakshmi Portal

As of August 15, 2020, 37 banks were registered on the Vidya Lakshmi Portal and offered 137 loan schemes.

2020: Amount of Student Loan Debt Reached

In 2020, the amount of student loan debt had reached $1.6 trillion.

2020: Joe Biden's Campaign Promise

In his 2020 presidential campaign, Joe Biden promised student loan forgiveness. 64% of Americans back student loan forgiveness of $10,000 for individuals earning up to $150,000 annually.

January 2025: Student Loan Forgiveness in the UK

As of January 2025, student loan borrowers in the United Kingdom on repayment plan five will have their loan canceled after 40 years from when they are due to start making payments.