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the list of partner universities and increase the number of student loan recipients. Some privately owned banks previously followed suit, although data from research institute SMERU showed that they operated on a relatively small scale with an average of 5,000 clients per year.
“If we decide to maintain current patterns, the poor will continue to struggle to pay for tertiary education as the rich get easy access to it.”
Despite the tepid interest in loans, senior policy protection specialist and education expert Dyah Larasati of the National Team for the Accelerated Poverty Reduction (TNP2K) nonetheless saw the need for similar programs that could boost the country’s university enrollment rates.
A study published by SMERU showed that while access to tertiary education had improved over the years, only 13 percent of all students in 2018 were in the bottom 40 percent of the country’s income brackets.
Last year, the Research, Technology and Higher Education Ministry reported that 7.5 million individuals had received access to higher education. The figure is only 32.9 percent of the total population of those aged 19 to 23 years old, which accounts for around 80 million to 107 million people.
Furthermore, a 2010 World Bank study showed that financial aid provided by universities only covered 3 percent of total costs while government-funded scholarships were limited.
Such fund shortages would then translate into a lack of employability for nonuniversity graduates in the labor market, Dyah said.
SMERU researchers said the current time-contingent loan model was unfair for low- income people, as it forced them to quickly repay loans, making a difficult economic situation even more burdensome.
To compare Indonesia’s situation to that of the United States, which had inspired Jokowi to make his speech on the matter, student loans accounted for almost $1.5 trillion spread over 44 million borrowers in 2017, as 2018 data from Student Loan Debt Statistics show. However, around 4.3 million students who took out loans defaulted on loan payments. The SMERU study proposed a government-run income-contingent loan program, where repayment starts once income passes a certain threshold. Researcher Elza Samantha Elmira suggested an annual median income of about Rp 13 million, or around Rp 1.5 million monthly, which she deemed attainable for university graduates.
She explained that the payments would be set proportionally based on an age-earnings profile — the higher the wage, the higher the percentage is.
To ensure repayments happen, the report then recommended that the Finance Ministry spearhead the program by integrating the loan into the debtors’ income tax system.
“If we decide to maintain current patterns, the poor will continue to struggle to pay for tertiary education as the rich get easy access to it, worsening economic disparities overall,” Elza said.
Without any government intervention, Elza estimated it would take four decades for the country to reach a 50 percent tertiary education enrollment rate for university graduates aged 18 to 24.