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Computer Graphics	Student Loans: Variations in Loan Programs Student loans vary from an international perspective in a number of ways. First, in my five-country study, loans play an important role in three (the United States, Sweden, and the Federal Republic of Germany), an insignificant role in France, and no role whatsoever in the United Kingdom. But student loans are also used elsewhere, principally in Scandinavia ( Denmark and Norway), Canada, Japan, and Latin America (especially Brazil and Colombia, but also Ecuador, Dominican Republic, Jamaica, Panama, and other countries). Second, probably the most important difference among the loan plans is their degree of subsidy. All are, and probably must be, subsidized to some degree. I do not think that there exists an interest rate high enough to carry a truly unsubsidized student loan plan available to all students without collateral or credit checks or risk-rating. But there are different types and levels of subsidies. The principal consequence of the high degree of subsidization in Sweden and Germany is not just a shift of costs to the taxpayer; it is the resulting imperative of a strict needbased rationing--and the consequent inability of loans to serve effectively as a backstop for students denied, for whatever reason, their parental or governmental portions, or as a device to shift some consumption and living standard from the future to the present. In this light, the American GSL, especially as rates have converged in recent years, is a more flexible and useful instrument. But it is still not available, because of our need-based rationing, to the modestly affluent family who wishes the student to bear, by loans, a share similar to that borne by other students. The international perspective underscores the usefulness of a loan program that is subsidized enough to be accessible and not overly burdensome, yet also so sufficiently unsubsidized to undergird that share of costs deemed appropriate to be borne by students without the fear of its being misused and converted to cheap capital by the non-needy family. Third, generally available student loans, at least in the United States and Scandinavian experiences, do seem to encourage or make possible a steady shift of burden from parents and taxpayers to students. At the same time, a shift of burden from taxpayers or parents to students via loans is always accompanied by a secondary shift of some burden back to the taxpayer via the governmental subsidies. Fourth, Scandinavians have not experienced student loan default problems to the extent Americans have. Part of the difference may be in our generally greater lawlessness or in the Scandinavian's greater social and geographic cohesiveness. More important may be the very great accessibility in the United States of higher education--and thus of loans--to young adults with neither commercial credit nor academic aptitude, nor very likely a job upon graduation. I see little in the experiences of Sweden, Germany, or other European lending nations that could help us lower our defaults. And fifth, Swedish and German loans, like the National Direct Student Loan (NDSL), are capitalized from the government's operating budget and treated like any other expenditure rather than like investment expenditures or assets. Thus, new loan capital weighs more heavily than it might on the Ministry's operating budget. Other countries, such as Denmark and Canada, rely as do we more on guarantees in the private capital market. While the latter can also distort the true costs of lending--for example, by obscuring future obligations for interest subsidies and purchases of bad debts--governmental guarantees of privately originated debt help reinforce the crucial distinctions between grants and loans. In conclusion, it is difficult to lift intact whole or even parts of programs from other countries. Our financial aid system, including our loan programs, the state guarantee agencies, and the like, may be a monstrosity on paper. But it works reasonably well in terms of our adjustments and expectations and tolerances, and by-and-large, we can be proud of it. Nonetheless, I think we can better understand our own financial aid and loan system, like our language or our own culture, when we understand those of other countries.