Income contingent student loan design: Lessons from around the world

Date

2019

Authors

Britton, Jack
van der Erve, Laura
Higgins, Timothy

Journal Title

Journal ISSN

Volume Title

Publisher

Pergamon Press

Abstract

The use of income contingent loans (ICLs) for Higher Education (HE) students is becoming increasingly prevalent around the world. Using a model of simulated lifetime earnings for graduates, in this paper we show that the impact of the design of ICLs on the magnitude and distribution of government subsidies is highly dependent on the institutional setting. In particular, the average debt level as a share of average earnings is a key determinant of the impact of various policy parameters. The variance of earnings within the graduate population is also shown to be a determinant of ICL taxpayer costs. This paper is the first comparative exercise of impact of the design of ICLs in different settings, and the findings are highly relevant to countries looking to implement or reform their student loan systems.

Description

Keywords

Higher education funding, Educational finance, Tuition fees, Income contingent loans

Citation

Source

Economics of Education Review

Type

Journal article

Book Title

Entity type

Access Statement

Open Access

License Rights

Creative Commons Attribution 4.0 International License

DOI

10.1016/j.econedurev.2018.06.001

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