Financing education and building future human capital

Before the university admissions season reaches its peak, when millions of students await admission results and benchmark scores, many Vietnamese families are already calculating how to finance the new academic year. For low-income and near-poor households, as well as families facing unexpected financial hardship, tuition fees and living expenses often become the greatest obstacle to higher education.

At moments like these, Vietnam's student loan programme takes on renewed significance. More than a source of concessional financing, it has become a critical safety net that enables countless young people to continue their education and pursue their career aspirations.

Addressing the 13th National Congress of the Ho Chi Minh Communist Youth Union for the 2026-2031 term, General Secretary and State President To Lam underscored this commitment, saying: "No legitimate aspirations of young people should be left behind because of a lack of information, opportunity, support, or confidence."

His message reaffirmed the Party and state's long-standing development philosophy of placing people at the centre of national development, while recognising education and training as key drivers of human capital development and equal opportunity.

Launched in 2007 under Decision No.157/2007/QD-TTg and subsequently refined through a series of policy amendments, the student loan programme has become one of Vietnam's most impactful social welfare initiatives.

According to the Ministry of Finance, as of May 31, the programme had provided loans to more than four million students, with cumulative disbursements reaching $3.7 billion. Outstanding loans stood at $979 million, benefiting 355,805 households. Notably, overdue loans accounted for just 0.27 per cent of the total outstanding balance, reflecting both the programme's effectiveness and borrowers' strong repayment discipline.

These figures demonstrate that every concessional loan extends beyond immediate financial assistance. By helping students remain in school, the programme has contributed to widening access to education, reducing school dropout rates, promoting equal educational opportunities, supporting sustainable poverty reduction, and strengthening Vietnam's future workforce.

As Vietnam's socioeconomic conditions continue to evolve, the programme has also been progressively expanded to cover more beneficiaries while making access to financing easier. Students are currently eligible to borrow up to $160 per month at a preferential annual interest rate of 6.6 per cent.

Borrowers are not required to repay either principal or interest while studying, with repayment commencing only 12 months after graduation. Administrative procedures have also been streamlined through the nationwide network of the Vietnam Bank for Social Policies and entrusted mass organisations, making loans more accessible, particularly in rural and disadvantaged areas.

However, as universities gain greater financial autonomy and tuition fees and living costs continue to rise, the current borrowing limit is increasingly falling short of students' actual financial needs. Recognising this challenge, the Ministry of Finance has proposed doubling the maximum monthly loan ceiling to $320 under a draft decision submitted to the Prime Minister. The proposal also seeks to expand eligibility to ensure the programme better reflects today's education costs.

Viewed narrowly, the proposal represents an increase in financial assistance for students. Viewed strategically, however, it signals a broader development philosophy: investment in education should not be regarded as public expenditure, but as investment in human capital - the most valuable asset of any economy.

As Vietnam pursues its ambition of becoming a high-income economy by 2045, the country will require a highly skilled, innovative and competitive workforce. In that context, the student loan programme serves as a social welfare policy, but also as a long-term investment in national development.

The concessional loans extended today are opening university doors for a new generation of students, while laying the foundation for a stronger talent pool and higher quality economic growth in the decades ahead.

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