With an outstanding student loan balance of $1.3 trillion, we’re all too familiar with the way the United States handles higher education financing. Other countries take a completely different approach to higher education and student loans. Here’s a brief overview of different tuition fees and student loan repayment policies across the globe.
In Sweden, tuition is free but many students still borrow to cover their often high cost of living. Swedish students graduate with an average debt of 172,000 kronor, or just a little over $20,000 USD. Even with this level of debt, there is no student loan crisis in Sweden. Student loans are repaid over a 25 year period of time, and payments start low and slowly rise throughout the life of the loan.
Public universities in Germany are tuition-free, with many universities offering programs in English to attract international students. The law that regulates Germany’s student loans and grants is called Bundesausbildungsförderungsgesetz, or BAföG for short, and provides funding to cover living expenses and other fees. While German students qualify for BAföG based on financial need, half of BAföG funds are usually grants, while the other half is an interest-free loan, with a maximum repayment amount of 10,000 Euros. International students are only eligible for BAföG in unique cases, which usually involves a family member or spouse having German citizenship.
In Australia, tuition is covered by a subsidy called the Higher Education Loan Programme (HELP) that doesn’t need to be paid back until the student earns a certain amount of income. In 2016-17, students who earn less than $54,869 won’t be required to make any payments toward their student debt. Those who have higher incomes are only required to repay a percentage of the loan based on their income, and those funds are deducted from their paychecks like a tax. Perhaps the most striking difference is the fact that these funds have a 0% interest rate, with the balance only growing with inflation.
While France doesn’t offer free tuition, the cost of higher education is significantly lower than one would pay in the United States because the government takes on the majority of the cost. Annual tuition at public universities is based on the degree program (Licence, Master, or Doctorate). Licence programs are the closest equivalent to a Bachelor’s degree in the U.S., requiring 6 completed semesters and a total of 180 credits, but the annual cost is only €184, or a little over $200 USD. This Licence, Master, Doctorate system is standardized across the European Union, so credits earned in France are cumulative and transfer between European institutions.
In Iceland, public universities only charge an annual registration fee – tuition is free. The registration fee is 75,000 ISK (about $613 USD), and students may apply to the Icelandic Student Loan Fund to cover living costs. Unlike the U.S., Icelandic students are awarded student loan funds based on their creditworthiness, but it is possible to apply with a guarantor. According to the 2015-16 allocation rules, once the student ceases to receive the loan it is “closed”, and repayment begins two years after the closure. Loans are index-linked and carry an interest rate of up to 3%, determined on the date the loan is closed. Students have two annual repayment options: either a fixed payment due early in the year (usually March 1), or a supplementary payment based on 3.75% of the previous year’s income and due on September 1.
It should be noted that this information is based on citizenship of the listed countries and doesn’t apply to international students unless otherwise stated. While you may not be able to become a citizen of another country to save money on your student loans, you can refinance to get out of debt faster and lower your interest rate.