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. Last Updated: 07/27/2016

Sberbank Rides to Students' Rescue




Obtaining a cost-free higher education was once an inalienable right for every Soviet student.


But today, the reality of overworked universities with underpaid professors is slowly erecting a barrier preventing all but the cream of the high school crop from getting their tuition fees waived. Students with less than top marks are increasingly having to fork over tuition fees of $400 to $7,000 a year, a cost that often means they either have to forgo higher education or work long hours while studying.


But all that is poised to change, Sberbank says. The nation's largest savings bank has pulled the wraps off what it says will for the first time level the playing field for student hopefuls: a student loan program.


Sberbank quietly announced last week that it had earmarked 1.5 billion rubles ($53.8 million) for student loans. The 10-year loans will cover up to 70 percent of educational costs and carry an attractive annual interest rate of 21 percent, an amount roughly comparable to inflation.


Students priming for the fall semester can already apply for loans at the nationwide branches of the bank, which had been mulling over a student loan program for years, Sberbank spokeswoman Anna Shereshevskaya said.


"We have been offering loans for immediate needs for a while, knowing that a lot of people take such loans to pay for education," Shereshevskaya said.


Sberbank's program has the prerequisites that the student has already been accepted at a university or institute and that the loan be co-signed by the applicant's parents or guardians. The size of the loan is subject to the amount of the co-signers' incomes.


For the time being, however, the number of students applying for Sberbank loans would most likely account for a small percentage of the 4 million studying in universities and institutes, students and academicians said.


A whopping 73.4 percent of the nation's 4 million students do not pay for their studies, according to the Education Ministry.


While the number of paying students has been steadily growing over the past decade, even the most prestigious schools f Moscow State University and the Moscow Institute of International Relations included f still have only 20 percent to 30 percent who pay, said Education Ministry spokesman Yury Semyonov.


Word of the arrival of a student loan program similar to those used in the West for years is being met with sharply mixed feelings from college professors, administrators and students.


"A student loan program is very important to the development if Russian higher education, and the announced program looks very ambitious," said Peter Ekman, a financial educator who has taught at several Moscow institutes, including the Higher School of Economics and the American Institute of Business and Economics.


"If that had been possible several years ago and I had known about it, I think I would have taken out a loan," said Evelina Markova, a third-year student studying finance at one of the city's institutes. "That would have saved my parents the shock and stress of pulling $1,800 out of their pockets as a onetime payment for a year of tuition."


Art Franczek, associate dean at the American Institute of Business and Economics, applauded Sberbank's efforts, saying his institute had considered trying to work with some banks before the 1998 crisis to establish a loan program.


But the accounting and taxation professor also warned that the bank would have to be careful to ensure that the loans were repaid.


"In the U.S., the percentage of the students taking loans and avoiding paying back is high," Franczek said.


A number of other professors and students also expressed concern and f at worst f dismay at the prospect of a student being in debt.


Viktoria Illarionova, a third-year student at the Griboyedov Institute of Law and Economics, called the loans "a risky step" for students, because many could not guarantee that they would be able to land jobs right after graduating that would allow them to repay the funds.


"I would not recommend loans for those who are not sure that they will have a place to work after graduation," Illarionova said. "Unfortunately, nowadays it is hard to be sure of that. Many people put their diplomas aside and take jobs that have nothing to do with their training."


Yassen Zassursky, dean of the journalism department at Moscow State University, or MGU, said that the loans compounded with interest could still put tuition costs out of the reach of many students.


"Tuition fees are just too high. I don't know how realistic it will be for our students to pay them back," Zassursky said.


MGU tuition fees vary depending on the department but start from $440 a year for journalism up to $3,000 for law.


Zassursky said that loans for students who had qualified for tuition-free studies might be more useful since the cash would give them the opportunity to concentrate on their studies instead of looking for jobs to feed themselves.