Cheaper student loans-led economic growth

The EV proposal awaits final rules; export working capital and expansion finance are distinct facilities. These priorities deserve support. But where is education?

Consider a parent earning Rs30,000-100,000 monthly, supporting three or four children. Food, rent, electricity, gas, fuel, healthcare, school fees and phone bills consume the salary. What remains for a housing deposit or an EV down payment?

A subsidised export facility means little to someone struggling to keep the kitchen running. Imagine this parent paying for an affordable private school until a child reaches 12, 15 or 18. Then comes the calculation nobody should have to make: another year studying, or another income from a shop, workshop or construction site?

Plumbing, electrical work and mechanics are valuable options for father but better to have engineers, doctors, lawyers, financial analysts, accountants and AI developers. Low earnings force interrupted schooling; interrupted schooling restricts future earnings. Poverty renews its own contract.

Pakistan's 2023 census recorded literacy among people aged 10 and above at approximately 60.7%: 68% for males and 52.8% for females. Unicef estimates 25.1 million children aged 5-16 are outside school – 35% of that age group.

These are tomorrow's workers, taxpayers and parents. Attendance alone is insufficient. A World Bank evaluation, using Unesco data available in September 2023, reported minimum primary mathematics proficiency of 8% in Pakistan against 91% in Vietnam, although underlying assessments differ.

South Korea, once poor and now advanced, ranks among the strongest PISA performers. Our challenge is both access and learning. Pakistan already has an NBP-administered interest-free student-loan scheme.

What it lacks is universal, dependable access comparable to mainstream asset finance. England's outstanding student loans reached £295 billion in March 2026 – roughly 10% of the UK GDP. Nor should we mistake growing student debt for proof of faster GDP growth: useful learning and productive employment must justify borrowing.

Student debt is highly correlated to stronger GDP growth for middle and developed countries. A PM Apni Taleem programme with nationwide eligibility for educational finance from Rs50,000 to Rs5 million, covering accredited schools, colleges, universities and vocational institutions, is needed.

Guarantee a 5% annual borrower rate on a reducing balance for 30 years. Offer independently approved Shariah-compliant alternatives. Universal eligibility should coexist with larger grants for poorer families.

For schoolchildren, grants and attendance stipends must lead; loans cannot replace free compulsory education or compensate fully for lost household earnings. There are practical models. India's PM-Vidyalaxmi offers eligible families three percentage points of interest subsidy, while qualifying poorer technical students receive full moratorium-period interest support through its companion scheme.

PNB provides repayment over 15 years after the course-plus-one-year moratorium. Britain generally collects undergraduate repayments at 9% of earnings above a threshold. Pakistan should borrow income protection, while avoiding excessive balances and poor-value degrees.

Split budgeted subsidies and guarantee costs equally between federal and participating provincial governments, with development agencies and philanthropy contributing. Banks could receive Kibor plus 2%, government paying the difference and guaranteeing 50% of verified net credit losses.

Banks must retain meaningful risk. At an illustrative 11% Kibor, the subsidy gap is eight percentage points: Rs8 billion annually per Rs100 billion outstanding, before defaults and administration. Disburse fees directly to accredited institutions with FBR registration, audited accounts, digital receipts and published learning and employment outcomes with globally verifiable educational standards.

Mandate all private schools to offer student loan to minimum 25% pupils to receive tax breaks. This would improve transparency and collection of legally due taxes without treating every private educator as an evader. Build one application portal with assisted access through banks, microfinance institutions, telcos and fintechs.

Use consent-based FBR, EOBI and provincial social-security records, including SESSI, to identify earnings when students enter job pool. Job-portal registration should trigger support, not repayment. Collections should begin above a protected income threshold through payroll or authorised weekly or monthly debits, with hardship pauses and eventual write-off.

Mobilise pension and impact capital through 30-year education funding instruments. Annual diaspora "Pakistan Education Bonds" could supplement rupee funding, with foreign-exchange exposure explicitly budgeted. The prime minister should commission a 90-day design, co-led by federal and provincial ministries of finance, education, educational chains, SBP, banks, microfinance institutions, fintech, edtech, employers, philanthropists, donors and established players such as Akhuwat, etc.

Done well, this could expand skilled employment, women's participation, wages, entrepreneurship and service exports; strengthen public-service delivery; and reduce vulnerability to crime and dependence on assistance. These gains require jobs and quality, not loans alone.

A fuel concession wins attention today. Keeping a child learning can earn a family's trust for decades. In 2047, Pakistan turns 100.

We have 21 years. What better centenary investment than an educated Pakistani. The writer is an independent economic analyst