Degree on Credit

How the U.S. System Works

American higher education is funded from several sources simultaneously: students' and families' own resources, university and government grants, as well as student loans. If grants and personal funds aren't sufficient, students can cover the remaining tuition costs with loans. In recent years, debt burden has become a significant part of the American system: in the second quarter of 2026, total student debt reached $1.65 trillion, with approximately 42.6 million borrowers in the federal student loan system. 

In the 2025/26 academic year, the published cost of one year at a public four-year institution averaged $11,950 (~1 million rubles) for in-state residents, and $31,880 (~2.76 million rubles) for out-of-state students. At private nonprofit universities, it was $45,000 (~3.9 million rubles).

If personal funds and grants aren't enough, the remaining amount can be financed through loans. Federal student loans have fixed rates that depend on the borrower category and academic year. For undergraduate students in the 2026/27 academic year, the rate is 6.39% annually. For graduate students and professional programs, it's 7.94%, and for PLUS loans, 8.94%. Repayment terms depend on the program: the standard federal plan typically requires repayment over 10 years, while certain programs allow payments to be stretched over a longer period.

It's precisely this combination of high education costs and loan financing that creates accumulated debt. In the 2023/24 academic year, 47% of bachelor's degree graduates had debt. The average debt among borrowers was $29,560.

Meanwhile, the cost of education itself has grown unevenly over the past decade. In real terms, from the 2015/16 to 2025/26 academic year, tuition at public two-year colleges decreased by 10%, at public four-year institutions for in-state residents by 7%. At private nonprofit four-year universities, costs increased by 2%. 

The problem with the American model is that loans allow students to obtain an education without paying in full upfront, but shift part of the expense into the future. If post-graduation income proves insufficient, the borrower must service the debt themselves. At the system's scale, this becomes a nationwide financial problem: in the second quarter of 2026, 10.6% of student debt was more than 90 days delinquent.

How the Russian System Works

In Russia, higher education is divided into state-funded and fee-paying. Under state-funded education, students don't pay tuition, whereas with commercial enrollment, the student or their family bears the costs. It's the cost of fee-paying education that has been rising at a notable pace in recent years.

The average cost of one year of study increased from 63,000 rubles in 2011 to 192,000 rubles in 2021. Over ten years, the increase was 205%, while official inflation over the same period was around 54%. In 2025, the average cost of education rose another 13.3%, and in 2026, according to preliminary data, by 10.7%. For programs where a regulated maximum on fee-paying places applies, the increase was 10.9%.

The cost difference between regions remains substantial. In 2026, the average cost of one year of study in Moscow and Saint Petersburg is around 450,000–650,000 rubles, while in the regions it averages 160,000–280,000 rubles.

For those who cannot pay tuition upfront, there's a government-subsidized student loan available. The interest rate for students is 3% annually. The borrower is the student themselves, and no income verification or guarantors are required for approval. Funds are transferred directly to the university and used for tuition payment. Repayment of principal begins after the grace period and can continue for up to 15 years, with the grace period including the time in school plus nine months after graduation.

Demand for this mechanism is growing. In the 2025 season, Sberbank signed 98,600 educational loan agreements—35% more than a year earlier. The volume of disbursements reached 18.2 billion rubles, increasing 1.5-fold. T-Bank processed 18,200 agreements—more than 2.8 times the previous year's figure, with lending volume exceeding 7 billion rubles.

The loans aren't just used for first undergraduate degrees. According to T-Bank data, 60% of agreements were for bachelor's programs, 25% for master's programs, 10% for specialist degrees, and another 5% for doctoral programs and academic specializations.

Starting in 2026, however, subsidized lending has become more targeted. It's now tied to a list of professions, specialties, fields of study, and academic disciplines aligned with the goals of technological independence and leadership. These include mathematics, applied mathematics and computer science, computer sciences, information security, electronics, energy, chemistry, biology, and engineering and technology fields, among others.

As a result, educational loans in Russia serve two functions simultaneously. They allow students to pay for increasingly expensive tuition while also becoming an instrument of state workforce policy. The choice of specialty now determines both one's future profession and access to financing on preferential terms.

The U.S. largely allows students to borrow money now and independently bear the consequences of that decision in the future. Russia assumes most of the credit risk cost, but simultaneously gains the ability to influence which educational paths will be financed on preferential terms.

In both cases, education remains an investment decision—only in the American model the main risk is tied to the size of future debt, while in the Russian model it also depends on the choice of specialty, which determines access to state support.