The Research On Incentive And Constraint Mechanism Of National Student Loan From The Perspective Of Default Behavior

Initiated in1990, the national student loan has offered financial support and assistance for poor students and made great contribution to the promotion of equality of educational opportunity, which has aroused wide attention in society and become an essential part in high education system. However, as the national student loan has entered into its cost recovery period, some problems emerge including students'high default rates and banks'delay in providing loans, which impede the development of student loans. How to effectively address the higher student loan default rate becomes an important issue.With the integration of previous literature and current situation, this paper explores how to promote the development of student loans with the method of combing theory with practice, comparative analysis, logic inference and model analysis from the perspective of incentive and restriction mechanism.The principal-agent theory supports the idea that the root cause of moral hazard and adverse select is the information asymmetry between the principal and agent. However, the agents would not deviate from the client's expectations if effective incentive contracts were employed. At present, the existence of high default rate of education loan is primarily due to system defect and imperfect incentive and restraint mechanisms which can not restrict students'defaulting behavior. This paper analyzes the current state of the student loan and the characteristics of defaulting behavior as well as explores the importance of constructing incentive and restraint mechanism and its influence of its scarcity by using the game theory. On this basis, through learning from successful cases of national student loans in other countries, this paper puts forward some suggestions, including implementing differential interest rates, optimizing students loan programme, displaying the credit increase function of the schools and banks, improving risk sharing mechanism and reconstructing legal and moral restraint framework, to the establishment of a more systematic and perfect incentive and restraint mechanisms for national student loan.