Revive the student loan scheme

Revive the student loan scheme

The Jakarta Post reported this week that three students from
Java were accepted into the Bogor Institute of Agriculture (IPB).
On the surface, nothing is extraordinary about this good news --
there are thousands of other students in the country who are
granted similar opportunities every year.

The three youths were the sons and a daughter of a small
farmer, a retired village head and a motorcycle taxi (ojek)
driver. They registered at the institute through a special
program for exceptional high school students without the
knowledge of their parents. They informed them only after they
received their notification letters.

However, these letters of acceptance did not automatically
open the door to the IPB. The students' parents could not afford
to pay the about Rp 5.7 million (US$650) needed for tuition fees,
accommodation and course materials.

Luckily, the private sector came to the rescue. The students'
stories caught the attention of one Jakarta-based foundation and
a wealthy figure who offered to pay their costs. God-willing,
this support will ensure the three become the first people in
their families to pursue higher education, a dream realized.

However, these three students are just the tip of the iceberg.
How many talented students currently miss out on education will
never be known. The government has compiled no data on the matter
and dealing with this is not a listed priority at the moment. The
financial crisis, which hit Indonesia in 1998 and then developed
into a multi-dimensional crisis, has caused small and medium-size
businesses to close and lay off their workers. These new
unemployed have no option but to shift the priorities to meet
basic needs, like feeding their families.

Education is expensive and many say higher education will
always remain a privilege, not a right. The current system
dictates that only smart youths with the proper economic
resources can pursue their education at universities, especially
as tuition fees continue to rise each year. But there are
exceptions in life and the case of the bright students is one of
them. They are a special breed -- they can be groomed as skilled
workers to do research in laboratories, teach at our
universities, become bureaucrats or even future leaders.

It is important that both businesses and the government set
aside funds for social programs and grant scholarships to
students who are interested in pursuing their studies at colleges
and universities. Similar programs in the past to help needy-but-
bright students should be reactivated if not widened to cover
more youths.

Student loans, a scheme common in other countries, especially
developed nations, is another way to help poor students finance
their studies. We can learn from other countries how to raise the
money required for the loans and manage and organize the
repayments. The time is ripe for Indonesia to initiate this
scheme as many banks -- small and big -- are over-liquid because
of the high public saving rate.

Indonesia needs to increase the education and training of its
human resources, including university students, in order to build
a strong pool of skilled workers and technocrats to run this
country in the future. The success stories of Japan, South Korea,
Taiwan and Singapore -- all without natural resources -- prove
the prosperity of a nation now depends more on the quality, not
the quantity, of its citizens, while a large population counts
for little or is a burden.

State banks provided student loans in the form of the Student
Credit (KMI) scheme in the 1980s and shelved it in the 1990s
because many recipients of the loans failed to pay.

However, the fact many students defaulted should have been a
reason to rectify the program, not to drop it. Student debt has
some positive aspects: It teaches loan recipients how to use
money efficiently and responsibly if they are to pay it back
later. They also learn about facing the consequences -- the law
-- if they default.