History of Student loan in Timeline

Student loans are financial tools to fund post-secondary education, covering tuition, books, and living costs. They often feature lower interest rates and deferred repayment during enrollment. Student loans are distinct due to stringent regulations regarding renegotiation and bankruptcy, which vary across countries. The key differences in student loan systems across major countries are highlighted.

1969: Student loan scheme introduced in Hong Kong

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: Student loan program extended in Hong Kong

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

1982: Student loan program extended in Hong Kong

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

1984: Student loan program extended in Hong Kong

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

1990: Student loans introduced in the UK

Between 1990 and 1998, student loans were introduced in the UK government.

1990: Student Financial Assistance Agency established

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

1998: Student loans introduced in the UK

Between 1990 and 1998, student loans were introduced in the UK government.

1998: Repayments collected by HMRC

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

2002: Drop in public spending on education

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

2005: Bankruptcy reform bill

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 regarding student loans

In 2005, bankruptcy laws were changed so that private educational loans also could not be readily discharged, alongside federal student loans which could only be discharged if repaying the loan would create an "undue hardship" for the student borrower and dependents of the borrower. Supporters of this change claimed that it would reduce student loan interest rates; critics said it would 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. Many universities steered student borrowers to "preferred lenders" which resulted in those borrowers incurring higher interest rates. Some of these "preferred lenders" allegedly rewarded university financial aid staff with "kickbacks", leading to changes in lending policy at many major American universities and universities rebating millions of dollars in fees back to affected borrowers.

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. Oberg argued that the lenders overcharged the U.S. government and defrauded taxpayers of millions and millions of dollars.

2007: Median family income decline

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: Korea Student Aid Foundation Established

In May 2009, the Korea Student Aid Foundation (KOSAF) was established to manage student loans in South Korea. The establishment was motivated by the governmental philosophy that Korea's future depends on talent development and no student should quit studying due to financial reasons.

2009: Education loan growth rate projection

In 2009, education loan 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 and paid $55 million. The lawsuit was filed on behalf of the federal government by former Department of Education researcher Jon Oberg against Sallie Mae, Nelnet, and other lenders.

2010: Education loan growth rate projection

In 2010, education loan was 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, where private lenders originated and held student loans guaranteed by the government, was eliminated in the US. The 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.

2011: Income threshold for student loan repayment

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

2011: Education loan growth rate projection

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

2012: Drop in public spending on education

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

2012: Education loan growth rate projection

During the period 2012–13, education loan was expected to grow at a rate of 44.8 percent.

2012: Income threshold for student loan repayment

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

2013: Income threshold for student loan repayment

As of 2013, if the borrower's income is above a certain threshold, repayments are required, though interest continues to accumulate on student loans in the UK.

2013: Economists predict 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. However, most economists and investors believe that there is no student loan bubble.

2013: Sale of student loan portfolio

In 2013, The Department for Business, Innovation and Skills in the UK sold a portfolio of early student loans from the 1990s. Following its successful purchasing bid of the loan portfolio in 2013, Erudio, a company financially backed by CarVal and Arrow Global was established to process applications for deferment and to manage accounts.

2014: Education loan growth rate projection

During the period 2012–13 to 2014–15, education loan was expected to grow at a rate of 44.8 percent.

August 2015: Vidya Lakshmi Portal Launched

In August 2015, the Indian government launched Vidya Lakshmi portal on Independence Day, August 15th. It was designed to aid students in finding educational loans, with initial integration of SBI, IDBI Bank, and Bank of India. Vidya Lakshmi was developed under the Department of Financial Services, Department of Higher Education and Indian Banks Association (IBA) under Pradhan Mantri Vidya Lakshmi Karyakram and announced by the finance minister Shri Arun Jaitley in the budget speech of FY 2015–16.

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. With the average annual tuition cost for a four year in-state public university averaging $26,590 for the 2019–2020 academic year, many students are forced to take out student loans to bridge the gap between grants and their annual tuition costs.

August 15, 2020: 37 banks registered on Vidya Lakshmi Portal

As of August 15, 2020, 37 banks were registered on the Vidya Lakshmi Portal, offering 137 loan schemes to students seeking educational loans.

2020: Joe Biden promises student loan forgiveness

During 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.

2020: Student loan debt reaches $1.6 trillion

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

January 2025: Student Loan Cancellation

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.