Head of the Association of Electronic Money and Money Transfer Market Participants Viktor Dostov on student loans

In the United States, 43 million residents are now paying off student loans totaling $1.74 trillion, an average of $29.1 thousand per student. In Russia, over the 13 years of implementation of the program, according to the Ministry of Education, less than 150 thousand loans were issued. Why such a huge difference with a comparable number of students?

Student loans in the United States are an integral part of the education system. They are issued easily, there is no need to visit the bank, interest rates are low and are paid only after graduation, and the collection policy is traditionally non-aggressive. Moreover, from time to time, politicians announce the idea of ​​full or partial government compensation for student debt. It is important that over the years, student loans have been integrated into habitual behavior patterns and have become a habit. It is also important that successful students offset a significant portion of their tuition through scholarships, so that the loan is partially paid for by these payments.

Who is the audience for loans? In general, these are not rich people who can afford the fees, but also not poor people for whom the US guarantees free or heavily subsidized education at public universities.

Most likely, these are the middle class, who do not fall into the poverty category, but cannot afford to pay $50,000 for a year of undergraduate education in the Ivy League, or the ambitious low-income. It is important to understand that historically in the US, graduating from university significantly raised expected wages, so the economics of borrowing worked out quite well.

Why didn’t such a story happen in Russia? The main reason is that the salary advantage created by expensive education is too small. The salary of a novice doctor or lawyer is not much different from the salary of a successful courier, and investments in education turn out to be very long-term.

The social tradition in the Russian Federation, stronger than in Europe or the USA, requires a diploma, but it can be obtained much cheaper than at a really prestigious university. The poor are simply oriented towards low-cost universities. The layer of the middle class, which is the main subject of student loans in the United States, is quite thin in Russia and does not provide effective demand.

Paradoxically, this is confirmed by the fact that citizens take out large loans (not necessarily bank loans) for personal development courses and similar quackery, which work precisely under the slogan of a highly profitable short-term investment – the courses are short, and income is promised immediately. Citizens also receive a second education on credit – the cost-to-result ratio is absolutely clear, and again, a second higher education is mainly the prerogative of the middle class.

What needs to happen for the trend to change? The prestige of higher education in terms of real pay may rise. But so far there is no such trend. Quite the contrary, we see growth in low-skilled and blue-collar professions. Education fees may rise sharply, but there are no prerequisites for this either, and without an increase in prestige this is unlikely.

Paradoxically, a drop in the prestige of higher education can lead to a similar result. When will society finally understand that integrals and macroeconomics are not needed to work as a sales manager or accountant? Higher education will become targeted and prestigious, and therefore more expensive. Highly paid professions with a guaranteed income significantly above average may emerge, like lawyers and dentists in the United States. However, we haven’t seen anything like that yet.

Viktor Dostov, head of the Association of Electronic Money and Money Transfer Market Participants