As summer slips into fall, universities have finished ship-ping out this year's graduates and have now turned toward welcoming their new freshmen classes. These arrivals and departures, in addition to shaping the future prospects of these young people, can also have big impacts on their personal and family finances. In 2009, tuition and fees averaged NT$59,490 at public universities and NT$109,806 at private universities, figures that represent 10.91% and 20.12% of Taiwan's average per-capita income. Going to college here certainly poses a heavy financial burden.

Consequently, many have to take out student loans to reach their educational goals. And graduates, even before they find a job, immediately find themselves facing the pressure of making payments!

According to the Ministry of Education, the number of applications for student loans from students in high schools or postsecondary educational institutions grew 5.3 times from 1998 to 2008 (from 152,000 to 801,000). The total amount of money loaned out grew from NT$5.583 billion to NT$29.906 billion. And the percentage of students applying rose from 4.42% to 19.16%, quickly swelling to almost one-fifth of all students.

From Figure 1, we can see that the growth in the percentage of students applying for student loans occurred largely in the years from 1998 to 2003. One can't help but wonder: why?

Percentage of students with student loans by type of postsecondary institution, 2005/ source: Taiwan Integrated Postsecondary Education Database, survey of freshmen in 2005, as cited in Pu Shao-ping, "Gender Difference in Student Loan and Part-time Work of College Students"

The growing number of students with student loans reflects two changes: the rising cost of college tuition and the growing number of students from low- and middle-income families going to college.

The rise in college tuitions is easy to spot: The average tuition at public universities in Taiwan, which has always been lower than at privates, rose from an average of NT$37,902 in 1996 to NT$59,490 in 2005 (57%). During the same period, tuitions at private universities rose from NT$94,778 to NT$108,026 (14%). Tuitions at both types of institutions rose much faster than the consumer price index (about 7%).

Next, let's turn to regulations governing student loans. Only families with annual incomes below NT$1.2 million can apply for these loans. Consequently, the rise in the percentage of students applying reflects the greater number of students from middle- and low-income families applying.

It used to be that enrolling at a university represented acquiring an elite education, with only a small fraction of the population attending. Those small numbers of people were concentrated among households that possessed higher social status and provided richer cultural stimulation-and those were families that largely didn't need to take out loans to send their children to university.

With the launch of educational reforms and the expansion of universities, the situation began to change. The number of universities in Taiwan rose from 28 in 1986 to 105 in 2010. (There are also 44 colleges and 15 vocational junior colleges.) Virtually 100% of those who take the entrance exam for college are admitted somewhere. As selectivity and average family income of those attending have decreased, the share of students from low- and middle-income families at universities has grown, and it can reasonably be inferred that a certain proportion of them need to take out loans to realize their educational dreams. (Fig. 2)

Average monthly income by level of educational attainmenta/ source: DGBAS report on the use of human resources

Apart from being related to trends in tuition costs and students' family incomes, the rise in the proportion of students who take out student loans is also connected with the types of educational institutions they attend.

As previously noted, educational achievement correlates closely with the socioeconomic background of students' families. In the current system, wherein students are admitted to universities based on the relative quality of their academic records, children of wealthy families often end up attending less expensive but more selective public universities. Meanwhile, at private technical universities, where the tuition is highest and selectivity lowest, the proportion of students taking out student loans is twice as high!

From Figure 3 we can discover another unfair phenomenon: There is a gender gap among those who have to apply for student loans.

The percentage of male university students who apply for student loans is 17.39%, whereas the percentage of female students is 20.77%-a gap of more than three percentage points. And women at both public and private universities apply for student loans at higher rates. At private technical universities, the gap is largest-almost five percentage points!

According a the master's thesis by Pu Shao-ping, in families with boys and girls, parents take markedly different attitudes toward investing in their children. They are much more willing to cultivate their sons and pay their tuition, whereas parents are more likely to tell girls that want to go to college to take out loans and pay their own way. Although it may seem that there is educational equality in Taiwan by looking at the rates of men and women attending college, women in fact have had to pay a higher price to get to that same place.

Students applying for student loans/ source: MOE; percentages calculated by author from MOE data

From the above analysis, we can determine the most likely candidate for student loans: a woman from a low-income family attending a private university.

This type of loan applicant starts out disadvantaged. But if she is able to clear all the obstacles she faces to enter a university, will she then garner an opportunity to attain upward mobility? It's hard to be optimistic.

From Figure 4, it is clear that even though higher educational attainment correlates with higher income, the edge it provides is shrinking quickly. Over the past 10 years, incomes for people of all income levels have largely been flat. The single exception is for those with at least a four-year university degree. For them, no matter the current state of the general economy, incomes have declined, from NT$51,375 per month in 2000 to NT$42,388 per month last year-a drop of 17.49%!

It seems that a student loan has quickly changed from being a means to realizing a dream to becoming an odd kind of ball and chain. It's a phenomenon that inevitably leads to serious doubts about long-held assumptions: Maybe education is no longer a sure path for individuals to take toward upward mobility. It's worrying to think that pursuing higher education might lead only to frustrations and anxiety.