The Contribution of Student Loans to Student Retention in Higher Education Institutions in Mwanza City, Tanzania

Abstract

This study examined the contribution of student loans to the retention of students in higher education institutions in Mwanza City, Tanzania. Higher education is critical for national development, yet financial constraints remain a major barrier to student persistence, particularly for those from low-income backgrounds. Guided by Human Capital Theory, the study focused on how student loans influence access, retention, and academic performance. A mixed-methods approach using a convergent parallel design was employed, involving 133 respondents, including students from CUHAS and CBE, as well as admission and loan officers. Quantitative data were collected through structured questionnaires while qualitative data were obtained via interviews. Quantitative data were analyzed using descriptive statistics, and qualitative data were subjected to thematic analysis. The findings revealed that although students are aware of funding strategies, particularly student loans and scholarships, 97.6% of respondents reported that current loan amounts are insufficient to fully cover tuition, living, and academic expenses. Nonetheless, student loans were found to significantly improve access to higher education, reduce financial burdens on families, and support student retention and academic performance. Well-structured loan schemes with reasonable and flexible repayment conditions further enhanced students’ confidence and reduced financial stress. The study concluded that student loans play a critical role in promoting higher education access and retention, but gaps in sufficiency and delays in disbursement remain key challenges. It is recommended that policymakers increase loan amounts to match actual costs, ensure timely disbursement, provide awareness of alternative funding options, and maintain flexible, income-based repayment schemes. Strengthening these measures will enhance retention, academic success, and the development of a skilled workforce in Tanzania.