Abstract
The issue of whether students should receive an interest-free non-repayable grant or an interest-bearing loan is analysed in terms of an actuarial comparison of the relative costs of financing tertiary education under a pure loan as against a pure grant scheme. Whether one is cheaper than the other to the students depends on factors such as the loan rate of interest, the student population growth rate, the number of years of a program of study, the working life span, and the failure rate of students. Due to the political obstacles of levying a “tertiary education tax”, a loan scheme may be more flexible and efficient than a grant scheme in meeting the needs of the students.
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