Can pay-as-you-earn funding fix Southeast Asia’s higher education debt problem?

A Singapore-based education financing programme is testing whether income-linked funding can widen access to higher education without an unmanageable debt burden, a model analysts say could help ease repayment pressure faced by graduates across Southeast Asia.

Global Financing for Education’s (GFE) Pay It Forward scheme, publicly launched in September, provides students with funding for their education in return for 3 to 10 per cent of their subsequent income for one to 10 years.

The income-linked repayments graduates make to GFE are typically capped at twice the original funding amount.

The arrangement shifts the risk of weak employment or low earnings from students to the financing pool. But economists say its private-sector structure raises questions about selection criteria and whether students pursuing lower-earning careers could ultimately be excluded.