TRENDS OF HIGHER EDUCATION LENDING IN THE USA
Authors: DZHEDZHULA Olena 
Published: February 2020

Lending to higher education in the world and in Ukraine is gaining in popularity. According to statistics, almost 60% of Ukrainian students study at a contract basis. The increase in tuition fees, the deterioration of the financial situation of families, and the desire of young people to obtain higher education creates contradictions, one of the ways to overcome credit education.

In developed countries, mechanisms of educational lending have been developed that provide young people with the opportunity to acquire education. It should be noted that educational loans are effective in countries with high-quality education systems that guarantee a future graduate with a reliable job security and stable salary. The United States relates to the seven countries with the best educational systems. Therefore, it is relevant to look for lending mechanisms for student youth in Ukraine to study the trends of lending education in the leading countries of the world, and in particular, in the United States.

The problem of finding out the mechanisms and causes of instability in the provision of educational loans in the United States has yet to be sufficiently highlighted in research by academics.

The purpose of the paper is to study the peculiarities and prospects of educational lending in the United States.

The cost of education in any country depends on GDP. The analysis shows a stable GDP growth in the United States. Expenditures on education and higher education have a certain degree of stability as a percentage of GDP. Thus, in comparison with 2016 this indicator in 2017 and 2018 increased by 0,1% and amounted to 5,1%. In 2019, expenditures are expected to increase by 0.1%, and in 2020 - by 0.2%.

The indicator of expenditure on higher education in relation to GDP also does not have a sharply pronounced tendency to increase. In 2016, total expenditure on higher education as a percentage of GDP amounted to 1.7%, and in 2017 and 2018, this figure dropped to 1.6%. In 2019 and 2020, higher education expenditure relative to GDP is projected at 2016 (ie 1,7%).

Such a state of education financing leads to an increase in tuition fees and updates the issue of education lending. The main reason for the increase in tuition fees economists consider inflation processes, which are an integral part of a market economy. The average tuition fee in 2018 increased by $ 250 (by 2.5%, respectively, the inflation rate is 2.9% in 2017). At the same time, the average federal payments per student were reduced. Consequently, you can confidently predict the increase in fees and in subsequent years.

In US education lending programs, you can select 3 types: federal, private, parent.

The greatest demand is federal loans. The most popular types of education loans today are Stafford Federal Student Joan and Federal Perkins Loans For College Students. The average loan amount is 21 thousand dollars. The most important advantage of these products is the possibility of repayment after the university graduate begins to work. Compared with loans for education in Ukraine, the lending rate for American students is much lower and ranges from 5-7%, and the maturity of the loan may reach 30 years. The peculiarity of these loans is that they are issued not only to the student's education, but also to his life.

Stafford's federal educational loan is more widespread. Its advantages are low interest rate and flexible repayment system. However, the maximum amount of a loan can only be provided if the requirements of this program: success, full-time education, the borrower must be a US citizen.

Experts believe that a significant percentage of students do not receive federal loans owing to insufficient information support for federal educational credit programs and formalities for their registration.

A simplified procedure for private student loans facilitates their active dissemination. Private lenders work directly with borrowers and are personally interested in distributing this type of banking product. The reasons for reducing educational loans should be considered as problems in debt repayment. As of March 2018, 52% of the outstanding debt on federal education loans amounted to 14% of borrowers worth $ 60,000 or more; 56% of borrowers with outstanding debt owed less than $ 20,000.

Student loan arrears rank second in the structure of Americans' loan debts and exceed $ 1.4 trillion, which negatively affects the US economy.

Consequently, the United States has the most advanced system of educational lending, which is a powerful incentive for higher education, and ensures its availability to the wages of people with different levels of income. For students, three types of educational loans are offered: federal, private, and parenting. The lowest interest rates may be obtained through a federal educational loan. The last 3 years are characterized by a decrease in educational loans The reasons that led to a decrease in the use of federal loans were the lack of awareness of students about this kind of lending, strengthening control over the implementation of loan agreement conditions.

The provision of educational loans in the United States is associated with a sharp increase in their arrears, which may lead to a financial crisis. Therefore, the development of mechanisms for their return becomes an economic problem that requires urgent resolution. We consider the prospects for further research with the study of debt relief programs in the United States.