Finance Minister Sri Mulyani Warns of Student Loan Risks, Cites 'Moral Hazard'

TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati warned that student loans must be prepared thoroughly to avoid creating a plethora of new problems as it did in the United States.

Acting Director General of Higher Education, Research, and Technology Nizam responded to the minister's statement on Tuesday, claiming that "it's what we are currently studying."

According to Nizam, Indonesia has a history of a failed credit scheme for university students. "One of the successful schemes [for student loans] is Australia. We are studying that for the moment," Nizam added.

The study, Nizam said, is conducted in cooperation with the Finance Ministry and the Indonesian Endowment Fund for Education Agency or LPDP.

In a similar vein, Sri Mulyani said the Supervisory Council of LPDP is currently reviewing the student loan system for university students. However, she's open with her worries.

"We must remain vigilant, in developed countries such as [the United States], student loans are implemented and caused long-term issues," she said during a press conference on Tuesday, Jan. 30.

The deputy head of the Supervisory Council of LPDP stressed that the agency will draft an affordable student loan. "So that it will not burden the students and to avoid a moral hazard," she said.

If this plan is realized, Sri Mulyani went on, LPDP will still provide affirmative scholarships for underprivileged students. According to the minister, the agency must pay close attention to this design in the future.

AMELIA RAHIMA SARI

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