History of Student loan in Timeline

Student loans are financial instruments designed to assist students in covering the costs associated with higher education, including tuition, books, and living expenses. These loans often feature lower interest rates and deferred repayment schedules compared to other loan types, specifically while the borrower is enrolled in school. However, they also come with strict regulations regarding renegotiation and bankruptcy in many countries. The financial risk associated with student loan defaults can sometimes be borne by the educational institution. The structure and regulations of student loan systems vary significantly across different countries.

1969: Loan scheme introduced in Hong Kong

In 1969, a loan scheme for Hong Kong students was introduced to help full-time students at the Chinese University of Hong Kong and Hong Kong University.

1976: Loan scheme extended

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

1982: Loan scheme extended

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

1984: Loans expanded

In 1984, loans were expanded to include students in the New City Polytechnic in Hong Kong.

1990: Student loans introduced

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

1990: Student Financial Assistance Agency established

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

1998: Student loans introduced

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

1998: Repayments collected by HMRC

Since 1998, student loan repayments have been collected by HMRC via the tax system in the UK.

2002: Public spending on education drops

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: Bankruptcy laws changed regarding student loans

In 2005, bankruptcy laws were changed so that private educational loans also could not be readily discharged unless repaying the loan would create an "undue hardship."

2005: Bankruptcy reform effect on student loans

Since 2005, bankruptcy reform lead debtors have to take the responsibility of private student loan debt in bankruptcy which can decline debtors’ intention of reducing costly defaults to declare bankruptcy.

2007: Median family income decline

From 2007 up until 2012, the median family income saw a steady decline each year making it increasingly difficult for students to pay back college tuition.

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 regarding "preferred lenders" which resulted in borrowers incurring higher interest rates.

2007: False claims lawsuit filed against lenders

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, alleging they overcharged the U.S. government.

May 2009: Korea Student Aid Foundation (KOSAF) established

In May 2009, South Korea's student loans began being managed by the Korea Student Aid Foundation (KOSAF).

2009: Education loan growth rate

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

August 2010: Nelnet settles lawsuit for $55 million

In August 2010, Nelnet settled a false claims lawsuit for $55 million, which was filed on behalf of the federal government by former Department of Education researcher Jon Oberg.

2010: Education loan growth rate

In 2010, the education loan is 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: Guaranteed lending program eliminated

In 2010, the guaranteed lending program, where private lenders originated and held loans guaranteed by the government, was eliminated due to the perception that it boosted lending companies' profits without benefiting students.

2011: Income threshold for repayments

For the 2011/2012 tax year, if a borrower's income is below £15,000, no student loan repayments are required in the UK, but interest continues to accumulate.

2011: Education loan growth rate

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

2012: Public spending on education drops

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

2012: Income threshold for repayments

For the 2012/2013 tax year, if a borrower's income is below £21,000, no student loan repayments are required in the UK, but interest continues to accumulate.

2012: Education loan growth rate

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

2013: Predictions of economic crisis

As of 2013, many economists predicted a new economic crisis resulting from an estimated $1 trillion of student loan debt; however, most economists and investors believed that there was no student loan bubble.

2013: Sale of 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 a successful purchasing bid.

2013: Income threshold for repayments

In 2013, for the 2012/2013 tax year, if a borrower's income is below £21,000, no student loan repayments are required in the UK, but interest continues to accumulate.

2014: Education loan growth rate

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

August 2015: Vidya Lakshmi portal launched

In August 2015, the Indian government launched the Vidya Lakshmi portal on Independence Day, August 15, for students seeking educational loans. Five banks including SBI, IDBI Bank, and Bank of India integrated their systems with the portal.

2019: Federal Pell Grant amount

In 2019, the Federal Pell Grant provided a maximum annual grant of $6,195 per student for the 2019-2020 award year.

August 15, 2020: 37 banks registered on the 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 presidential 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: 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.