Determination of KYK Loan/Scholarship Support

Many university students in our country need more than the allowance they receive from their families to meet their needs. In this regard, there are various options that students can apply for, and they can benefit from state support and foundation scholarships. As it is known, the most popular option is the scholarship/loan provided by the General Directorate of Credit and Dormitories (KYK). In accordance with the principle of social state guaranteed under the Constitution, the General Directorate of Credit and Dormitories provides scholarship/loan support as per the provisions of the Law No. 5102 on Granting Scholarship Loans to Higher Education Students and the Higher Education Credit and Dormitories Directorate Scholarship-Loan Regulation. There is one issue I would like to mention here; I encountered an authority problem while I was working on the relevant legislation. Law No. 5102 dated 03.03.2004 on Granting Scholarships and Loans to Higher Education Students states in the executive article that the law will be executed by the Council of Ministers, and Article 6 titled “regulation” provides that “The procedures and principles regarding the implementation of this Law shall be determined by a regulation to be issued jointly by the Ministry of Finance and the Ministry of National Education. A few months later, in the executive article of the Higher Education Credit and Dormitories Institution Scholarship-Loan Regulation published in the Official Gazette dated 24.08.2004 and numbered 25563, it is stated as follows: “The provisions of this Regulation shall be jointly executed by the Minister of Finance and the Minister of National Education. While it is clearly understood that the relevant legislation authorizes the Ministry of Finance and the Ministry of National Education, loan/scholarship procedures are currently carried out by the General Directorate of Credit and Dormitories under the Ministry of Youth and Sports. At this point, it would not be wrong to say that the administrative act of public service for the purpose of providing loans/scholarships is carried out by an unauthorized body. I would like to move on to the main issue after addressing this issue.

The General Directorate of Credit and Dormitories provides monthly scholarships/loans to higher education students in our country in order for them to meet their needs during their normal education period. Scholarships are given to students who are in economic need on a non-recourse basis, while loans are given to every student who meets the necessary requirements, on condition that they repay them within the specified period. Students can opt out of receiving scholarships/loans at any time, and if they opt out, they are only responsible for the repayment of the loan they have received until then.

How does the General Directorate of Credit and Dormitories determine the amount of this allowance? Article 8 of our Scholarship/Loan Regulation states that the Board of Directors of the Higher Education Credit and Dormitories Institution is authorized in this regard. In terms of the criteria that the Board of Directors must comply with when making this decision, the only requirement that has an impact on the amount of the scholarship/loan is “taking into account the budget of the institution”. In other words, the Board of Directors will determine a monthly scholarship/loan amount that it deems appropriate, taking into account the institution’s budget. Let’s look at the amounts determined for the last few years; the scholarship/loan of an undergraduate student was 470₺ in 2018 (x2 times for master’s degree and x3 times for doctorate), 500₺ in 2019, 550₺ in 2020, 650 ₺ in 2021. Unfortunately, there is no information on how these amounts were determined. At this point, when we look at the Student Economics Report prepared by our Arayuz Campaign, it is understood, on the basis of the students’ statements, that the loan/scholarship is not sufficient even to meet their basic needs, and that they use the KYK scholarship/loan more as an auxiliary-supplementary element.

Let’s take a look at whether these increase rates are sufficient to maintain the purchasing power of the loan/scholarship. We can easily make a comparison with the “inflation calculator” on the website of the Central Bank of the Republic of Türkiye. According to the data, 470 ₺ in January 2018 corresponds to 565.66 ₺ in January 2019 and 634.41 ₺ in January 2020. However, the monthly loan/scholarship amount was 470 ₺ in 2018, was 500 ₺ in 2019 and 550 ₺ in 2020. 500 ₺ in January 2019 corresponds to 560.77 ₺ in January 2020. Therefore, when we consider these three years in terms of the increased amounts, we clearly see that there has not been an increase to meet inflation, and there has been a loss in the purchasing power of the education scholarship/loan provided. In a statement made by President Erdoğan in 2020, he stated that the scholarship/loan, which was 45 ₺ 18 years ago, is now 550 ₺, demonstrating that progress has been made during his government. Again, if we look at the Central Bank’s inflation calculator, 45 ₺ in January 2002 corresponds to 281.25 ₺ in 2020. Therefore, we see that while the nominal increase is about 12 times, the real increase is about 2 times. So it can be said that the President is right that progress has been made. However, it is still questionable whether this is good enough. We would recommend our Report on Student Economics to readers for more detail in this regard.

Let’s take a look at how the repayment of loans is calculated. In the ‘Frequently Asked Questions (Loans & Scholarships)’ section under the heading ‘Our Services’ on the official website of the General Directorate of Credit and Dormitories, question 32 is “How are student loan debts calculated?”. In response to this question, the institution replied as follows; “The debt of the students who receive loans from the institution is calculated by adding the amount found by applying the increases in the Domestic Producer Price Index (D-PPI) of the Türkiye İstatistik Kurumu (Turkish Statistical Institute) (TÜİK) to the amounts given as loans from the date of granting the loans until the end of the education period or until the date the loans are terminated for any reason”. In other words, the institution determines the repayment of the scholarships/loans according to the D-PPI. The Domestic Producer Price Index is one of the main economic indicators calculated by the Turkish Statistical Institute and used to monitor inflation. According to the definition of TÜİK; “The Domestic Producer Price Index (D-PPI) is a price index that measures price changes by comparing the producer prices of products produced in the national economy and sold domestically in a given reference period over time”. Inflation is simply defined as the increase in the level of prices in an economy. There are many different indexes for calculating inflation. For those interested in the subject, we recommend reading The Economist magazine’s ‘Big Mac Index’, which compares the purchasing power of McDonald’s in different countries based on the price of Big Macs in different countries, as an interesting inflation calculation tool. To return to our topic, what we see is that the institution takes into account the change in the value of money when calculating the repayment of the loan. This is a very reasonable calculation method, but one wonders why the same calculation is not used for the annual increases in loans/scholarships.

In light of the problems mentioned above, we will try to make some suggestions on what can be done in the future. First of all, the institution should have a reasonable basis for determining the amount of scholarship/loan support to be given. The fact that a decision is made by the Board of Directors by taking into account the budget of the institution, so to speak, creates a situation as if the institution is granting a favor to students with this support. However, the institution fulfills a public service that is a requirement of the principle of social state, which is protected in the ‘non-amendable articles’ of the Constitution. Therefore, the service must be appropriate for its purpose in terms of quality and quantity. For this reason, in order to have an appropriate basis, the institution should calculate an index similar to calculations such as the hunger limit and poverty line, which will provide a reasonable justification based on concrete facts, or request this from relevant institutions such as TÜİK. With this calculation, which can be named as the Higher Education Student Life Index, the Institution will be able to determine the loan/scholarship amounts as a more reasonable and more legitimate amount. In fact, this calculation can be detailed according to regions and departments with a careful study. In fact, the living expenses of a student studying in Istanbul and a student studying in Çankırı will not be the same. As a matter of fact, the stationery costs of departments that constantly work on concrete products, such as architecture, and departments where intellectual work is carried out, such as law, will not be the same. The Institution should then calculate the annual increase of this fair amount calculated based on the expenses of higher education students, again with reasonable calculations. Just like in the case of repayment, this calculation can easily be made based on the inflation rates calculated by TÜİK.

For a more detailed look at the economic problems of students, be sure to take a look at the “Report on Student Economics” prepared by Arayuz Campaign.