Managing Student Debt: Lessons From Three Countries Leading the Way

Most people can agree that the benefits of a college education are invaluable. However, in some countries the advantages of a degree are offset by a crippling side factor: student debt. In other cases, the high cost of higher education renders academic opportunities inaccessible to families of limited financial means. Some countries, however, seem to have found solutions to student debt. Let’s take a closer look at three different approaches to higher education funding and student debt management from around the globe.

1. Sweden

While free tuition was once the standard in Europe, many countries have added or raised college tuitions and fees over the past two decades. Sweden remains one of the lone hold-outs with taxpayers still absorbing the cost of educating the country’s future leaders.

It pays to be a college-minded Swede, where government financial support for education is entrenched in the country’s ethos. The result? College and undergraduate tuitions are completely free. According to recent figures, Sweden provided just under $3.5 billion in support for college costs and living expenses to approximately 900,000 students in 2012 alone.

It’s worth noting that despite government-footed tuitions, Swedish students still graduate with debt, according to the Educational Policy Institute’s “Global Debt Patterns,” a comparative study on student loan burdens and repayment. The report reveals that 85 percent of Swedish students (even more than the 50 percent seen in the U.S.) graduate with debt due to the high cost of living. Perhaps even more noteworthy? These costs are largely and -- by design -- absorbed not by parents, but by the students themselves.

It’s also important to note that the monthly costs of carrying this debt is comparatively low in relation to what students experience in other countries. Why? Because it’s inherently structured to remain within reason for students beginning their independent lives.

Read more about studying in Sweden.

2. Australia

While Australia briefly dabbled with free higher education in the 1970s and 1980s, rising participation and enrollment numbers led to the reintroduction of tuition fees.

However, there is HECS-HELP. This a generous loan repayment system allows students to borrow their entire college costs and pay them back -- via automatic 4-8 percent paycheck deductions -- -- when their salaries reach a certain threshold. The result? A built-in cushion and safety net for students still finding their way to financial solvency. Students who are able to pay more, meanwhile, receive discounts for early repayment. Additionally, Australia’s indigenous population is also eligible for special higher education funding assistance.

Read more about studying in Australia.

3. China

Viewed by many as the antitheses of the American approach to higher education funding, China reports average yearly tuition costs between just $400 and $2,200 a year. This includes everything from instruction to room/board and meals.

China’s government-run institutions are held in significantly higher esteem than ones which are privately owned and operated -- making them the top choice for China's best and brightest students. Only those who are unable to gain entrance to these prominent government institutions consider more costly private alternatives.

Student Debt is a rising problem across many countries. While the U.S. is an easy target, other countries are also concerned: students in Britain are even more beleaguered by student debt than their American peers. Addressing this issue is far more than a matter of national pride. In addition to easing the burden on college grads and their families, improved educational access and more comprehensive funding translate to a skilled workforce and better positioning to meet the growing challenges of today and tomorrow.