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Why is the student loan scheme failing in Albania?
2026-10-13 10:30:00 / EKONOMI&SOCIALE
With the start of the new academic year, the National Agency for Financing Higher Education, AKFAL, opened applications for the student loan scheme to cover tuition fees and living costs.
According to the Agency's announcement, applications will be open from October 5 to November 4 through the e-Albania portal, while Union Bank has been selected for this process, with a fixed annual interest rate of 5.5%. The Agency undertakes to cover up to 5 percent of the interest rate, while the burden for the student remains 0.5 percent.
Although offered by the Albanian government since 2023, the student loan scheme has attracted a minimal number of beneficiaries. According to AKFAL data, a total of 23 students have benefited over the three academic years, while interest in applications has decreased year by year.
AKFAL Director, Laert Mezani, explains the low number of applications with the fact that "student loans are a relatively new instrument in Albania and not a traditional mechanism for financing university studies."
Mezani also hopes that simplifying procedures this year will increase interest among students.
“The application process is carried out through the e-Albania portal and has been significantly simplified,” he explained. The only requirements from the applicant are: proof of registration, proof of grades, and a certificate from the public higher education institution, indicating that the student is not a beneficiary of financial support, scholarship, or tuition fee exemption.
Student loans are very common financial instruments in the European Union and the United States of America, which mostly help families with insufficient income to educate their children.
In Albania, experts consider the scheme a failure and link this to bureaucracy, lack of promotion, and a broader crisis in our education system.
“Although I am an expert in financial markets and a regular follower of developments in this sector, I was not aware of the existence of such a product financially supported by the Albanian Government,” says Artan Gjergji, an expert in financial markets and services.
Gjergji also lists the parents' "conservative financial culture," as well as the strong criteria that banks use for risk analysis.
“The government only pays a significant portion of the interest costs, without taking responsibility in the relationship between the bank and the student borrower,” he said.
Rigels Xhemollari, head of the organization "Civic Stability", also notes that "banks have bureaucracy and obstacles that make it impossible to easily obtain a student loan."
An imported schema
The Council of Ministers' Decision No. 440/2023 on the student loan scheme highlights a number of bureaucratic barriers. Article 6 of this decision excludes from the benefit students who receive scholarships or those categories that are exempt from annual tuition fees.
This clause automatically excludes students with economic difficulties, who may not need the fee, but have a vital need to finance daily living costs during the period of studies.
In addition, Article 7 stipulates that when requests exceed the available funds, institutions must prefer applications “with the lowest loan value”, thus penalizing requests for full financial coverage. While Article 3 requires that financing of subsequent loan installments be made only after it is confirmed that the student has paid the annual tuition fee.
Xhemollari from "Civic Stability" emphasizes that in addition to banking bureaucracies, the scheme is failing because "the law was imported without considering the local reality."
"I think the loan didn't work at first because it only includes support for study and not living expenses, which is the biggest burden of the cost for the student," he emphasizes.
"Secondly, I don't think it's the right tool in a public education system. It was written for the English system because the law was copied from England, but it has no context in our country, which makes it non-functional."
For the Together Movement activist, Bora Mema, the failure of the student loan scheme is linked to a broader crisis in the education system in Albania.
"Higher education reform has been one of the biggest failures of this government," says Mema.
"The crisis of the economic model, where no matter what you study, you can't find a qualified job, no longer encourages poor families to invest, much less to be in debt to loan schemes for a degree, since university education no longer guarantees social mobility like it used to," she concluded./ reporter.al
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