History of Student loan in Timeline

Student loans are financial instruments designed to assist students in funding their post-secondary education. Key features often include lower interest rates and deferred repayment schedules during enrollment. Student loans are subject to specific regulations, especially concerning renegotiation and bankruptcy, which vary across countries. The student loan landscape differs significantly from nation to nation.

1969: Introduction of Loan Scheme for Hong Kong Students

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: Expansion of Loan Scheme to Hong Kong Polytechnic

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

1982: Further Extension of Loan Program

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

1984: Loan Expansion to New City Polytechnic

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

1990: Establishment of the Student Financial Assistance Agency

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

1990: Introduction of Student Loans

Student loans taken out between 1990 and 1998, in the introductory phase of the UK government's phasing in of student loans, were not subsequently collected through the tax system in the following years.

1998: HMRC collects repayments

Since 1998, repayments have been collected by HMRC via the tax system and calculated based on the borrower's current level of income.

1998: End of Initial Student Loan Phase

2002: Public spending on education dropped 30%

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

2005: Bankruptcy reform bill of 2005

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

2005: Bankruptcy Law Changes

In 2005, the bankruptcy laws were changed so that private educational loans also could not be readily discharged. This change would reduce student loan interest rates and increase the lenders' profit.

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 that led to changes in lending policy at many major American universities.

2007: False Claims Lawsuit Filed Against Sallie Mae and Nelnet

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

2007: Decline in median family income starting in 2007

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

May 2009: Establishment of Korea Student Aid Foundation (KOSAF)

In May 2009, the Korea Student Aid Foundation (KOSAF) was established to manage student loans in South Korea.

2009: Education loan growth rate in 2009

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

August 2010: Nelnet Settles False Claims Lawsuit

In August 2010, Nelnet settled a false claims lawsuit and paid $55 million.

2010: Education loan growth rate in 2010

In 2010, education loans were expected to grow at a rate of 39.8 percent.

2010: Federal Student Loan Program Profit

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

2010: Elimination of Guaranteed Lending Program

In 2010, the guaranteed lending program was eliminated because of a widespread perception that the government guarantees boosted student lending companies' profits but did not benefit students by reducing student loan costs. Prior to 2010, federal loans were divided into direct loans and guaranteed loans.

2011: Education loan growth rate in 2011

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

2011: Income Threshold for Loan Repayments in 2011/2012

In 2011, the income threshold below which no loan repayments were required was £15,000 per tax year for 2011/2012, though interest continued to accumulate.

2012: Public spending on education dropped 30%

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

2012: Income Threshold for Loan Repayments in 2012/2013

In 2012, the income threshold below which no loan repayments were required was £21,000 per tax year for 2012/2013, though interest continued to accumulate.

2012: Education loan growth rate 2012-2013

Starting in 2012, the education loan sector was expected to grow at 44.8 percent between 2012-13 to 2014-15.

2013: Predictions of a New 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.

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 process deferment applications and manage accounts after purchasing the loan portfolio in 2013.

2013: Income Threshold for Loan Repayments in 2012/2013

In 2013, the income threshold below which no loan repayments were required was £21,000 per tax year for 2012/2013, though interest continued to accumulate.

2014: Education loan growth rate 2014-2015

In 2014, education loans were expected to grow at a rate of 44.8 percent during the period of 2012–13 to 2014–15.

August 2015: Launch of Vidya Lakshmi Portal

In August 2015, the Indian government launched the Vidya Lakshmi portal on Independence Day, August 15th, 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, the Department of Higher Education, and the Indian Banks Association (IBA).

2019: Federal Pell Grant amount for 2019-2020

In 2019, 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 for the 2019-2020 award year.

August 15, 2020: 37 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: Student loan debt reaches $1.6 trillion

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

2020: Joe Biden's student loan forgiveness 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 cancellation after 40 years

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.