Higher Education Loan Schemes Across the Globe: A Systematic Review on the Utility Derived and Burden Associated with Educational Debt

Education is considered an investment in human capital that is gained at the cost of knowledge acquisition. This cost is borne by the beneficiary along with subsidy provided by the government, if any, that is mainly collected through tax revenues. This article aims to systematically review the utility derived and the burden experienced with educational debt borrowers across the globe as per the three types of educational loan schemes present across the globe. This study follows the PRISMA guidelines for review selection, and 47 articles published between 1994 and 2024 were included for the final review. The study results reveal that education improves the quality of life; an educational debt servicing to income ratio above 8% is considered as a financial burden. Also, the results reveal that material benefits are high after education along with an increase in the psychological burden because of repayment concerns. This study highlights the need to move towards designing a flexible repayment system in the education loan scheme based on the income contingent schemes adopted in many countries. Income contingent schemes reduce the repayment burden of the borrowers but the return to the lender is limited to the income of the borrower, and mortgage-based schemes are associated with high repayment burden. Therefore, a dynamic scheme will fix the problems associated with the repayment burden by creating a dynamic link between the benefits received and the contributions made by the borrower.