An Exploratory Study on the Implementation of Student Loans in Alleviating Poverty and Its Contribution to Human Capital Development in Sierra Leone

The investment in education creates present costs but brings benefits in the future such as increased earnings, improved health, economic growth, long life, and better service delivery in the place of work. The student expenses include but are not limited to tuition fees, books, and lodging costs which can be classified as direct costs and the opportunity cost of forgoing present leisure for expected benefits. Taking a loan from a bank requires collateral such as houses or machinery but this is not the case with student loans hence stringent agreement must be signed by the students showing commitments on the side of the student to honour future liabilities from future earnings as a student cannot contractually commit to handing over their future labour to a lender in exchange for upfront cash, because indentured servitude is illegal. The limitation of not providing collaterals has made it possible for governments to be the key investors if not the only investors in student loans as private investors are reluctant to provide unsecured loans; although there have been occasional efforts to offer loans securitized by human capital, none has moved beyond a small niche market. This market failure explains why governments play an important role in lending for education in developed and developing countries and there is remarkably little compelling evidence of the effect of student loans on educational. Higher education or tertiary education has been perceived as an important sector that contributes to economic progress among the countries of the world. Higher education has grown rapidly in Sierra Leone, at the same time the cost of higher education is also rising in all Tertiary Educational Institutions in Sierra Leone. Education loans or student loan schemes, as one of the sources of financing higher education, have been introduced in most countries around the world. This paper attempts to understand the student loan schemes introduced such as tuition fees, accommodation, and learning materials, and implemented in Sierra Leone through the government of Sierra Leone. The study concludes that the student loan procedures followed in other countries such as the Income-contingent loan (ICL) model that is been widely used around the globe and this recommendation be considered with suitable modifications for the improvement of our education loan scheme at present. In addition, future research recommendations were made. This research reveals that there are policy documents in place to aid the implementation of the Student Loan Scheme, however, we recommend that a vital document such as the Strategic Plan that provides direction for the implementation of the Student Loan Scheme should be developed.