A Research on the Model of Student Loan Repayment Based on a Sinking Fund

摘要

This paper analyzes the advantages and disadvantages of establishing a debt fund on the repayment of student loan. Based on these analyses, on one hand, we discuss the mode of equal fraction repayment of the total amount of the loan principal and its interest in each term. This mode yields great flexibility in that the repayment fund can have a greater interest rate to enhance the will of the lender to save money in the fund and thus can promote the early repayment. Banks can therefore regulate and control the situation and reduce the rate of contract breaking in loan repayment. Moreover, this mode can work well with the current policy and then can have excellent operability; On the other hand, theoretical analysis and example also shows that if the repayment amounts form a reasonable geometric increasing sequence, the repayment can be even more optimal in that it not only has the advantages of the foregoing mode, but also has the advantage of selecting the increasing rate of payments to adjust the burdens in each period of the repayment and make each period repayment burden relatively equal.