Chapman, BruceLeigh, Andrew2015-12-070013-0249http://hdl.handle.net/1885/19915Under the Higher Education Contribution Scheme graduates face a sharp discontinuity in their taxable incomes. At the first repayment threshold, they are required to pay a percentage of their entire income to reduce their debts. This results in an extremely high effective marginal tax rate. Using a sample of taxpayer returns we investigate whether taxpayers bunch below the repayment threshold. We find a statistically significant degree of bunching below the threshold, but the effect is economically small. The result has important implications for the design of income contingent university loan schemes.Keywords: contingent valuation; credit provision; debt; design; higher education; income distribution; tax incentive; tax system; university sector200910.1111/j.1475-4932.2009.00554.x2016-02-24