Behavioral Factors Influencing Students’ Loan Repayment in Tanzania

Abstract

This study examined behavioral factors influencing student loan repayment
among beneficiaries in Tanzania using a cross-sectional survey of 324
respondents. Findings revealed that 65% of respondents indicated a medium
likelihood of timely repayment if their income increased, while actual repayment
behavior was mostly rated as medium (61%), with only a small percentage
making high repayments. Although 65% acknowledged the importance of timely
repayment, prioritization of loan payments relative to other expenses was
generally low to medium. Guided by behaviorism theory, the study highlights a
disconnect between awareness of repayment importance and actual repayment
behavior, suggesting weak environmental reinforcement of repayment habits.
The study recommends strengthening incentives and penalties, improving
financial literacy, and adopting flexible repayment plans to enhance loan
repayment rates and sustainability of student loan schemes in Tanzania.