In early 1918, a fellow by the name of Gabriel Betancourt was born in Medellin, Colombia.  If the name sounds faintly familiar, it’s probably because of his daughter, Ingrid, the Colombia politician who was famously held captive by FARC guerrillas for six years.  But in education, Gabriel is the one that matters.  He’s the one who invented the idea of student loans.

To be fair, student loans weren’t entirely unheard of prior to WWII, but they were rare, and were offered by institutions themselves – Harvard’s loan program, for instance, dates back to 1840.  Betancourt’s innovation was to have the state, rather than individual institutions, offer the loan.  Thanks to his efforts, in 1950 the Colombian government set up ICETEX to help Colombian students finance their education, with Betancourt at the helm (he became Minister of Education a few years later).

Student loans took awhile to catch on.  It was another eight years before the US government began issuing loans under the National Defence Education Act; but it wasn’t until the 1965 Higher Education Act that they became available to students in all disciplines.  Japan, with its high university fees, was an early adopter, but so too were Denmark, Norway, and Sweden, who provided loans to help students with living expenses.  Canada’s loans program started in 1964.   The 1980s and 90s saw a large surge of new loan programs, many of which were inspired by Australia’s income-contingent model.  Not all of these were well-designed, and some essentially became grant programs because of non-repayment (rule one: never implement a student loan program in a country without a credit bureau).  But they continued to spread throughout Latin America, Africa, and East Asia.

Student loans often get a bad rap.  But most of the criticism is misplaced, for two reasons.  The first is misattribution of problems: people with high debts and low salaries aren’t in trouble because of their loans, they’re in trouble because their educational investment didn’t turn out so well.  (Loss-making money managers lose money because they’re crap at stock-picking, not because they borrowed money to buy shares; the same logic applies).  But more importantly, critics of loans use bad counterfactuals.  The alternative to a loan isn’t usually a grant; it’s nothing at all.  For millions of students around the world, loans are the only way to make education affordable and accessible – and on the whole they are remarkably successful and efficient in doing so.

Betancourt died in 2002, but tomorrow would have been his 95^th birthday.   Thanks to his ideas, tens of millions of students around the world got their chance in higher education, and at a better life.  If you get a chance tomorrow, raise a glass to him.