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Options for financing lifelong learning

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  • Palacios, Miguel

Abstract

How should lifelong learning be financed? The author attempts to answer the question by creating a framework for analyzing different education financing mechanisms in light of particular characteristics of lifelong learning. The framework compares the different financing alternatives on four dimensions: (1) who ultimately pays for the education, (2) who finances its immediate costs, (3) how payments are made, and (4) who collects the payments. The author uses specific characteristics of lifelong learning to determine which among the financing alternatives are most useful. The characteristics are that the individual should decide what and where to study, carry a significant part of the financial burden, and be encouraged to continue learning through all life stages. The author analyzes the financing alternatives according to who ultimately pays for the education. Hence, the alternatives are classified either as cost-recovery or cost-subsidization alternatives. Cost-recovery alternatives include traditional loans, a graduate tax, human capital contracts, and income-contingent loans. Subsidization alternatives are those in which the state directly subsidizes institutions or in which the state gives vouchers to students. The author concludes that combining income-contingent loans and human capital contracts with vouchers is the most efficient and equitable method for financing lifelong learning. The author discusses the role of governments and multilateral organizations in improving the financing of lifelong learning. He assesses shifting toward cost-recovery alternatives, focusing on collection of payments, and aiming for the involvement of private capital as key issues that should be addressed to ensure that lifelong learning will be available for all equitably and efficiently.

Suggested Citation

  • Palacios, Miguel, 2003. "Options for financing lifelong learning," Policy Research Working Paper Series 2994, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2994
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    References listed on IDEAS

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    1. Barr, Nicholas, 2001. "The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State," OUP Catalogue, Oxford University Press, number 9780199246595.
    2. Bruce Chapman, 2007. "Higher Education Financing in Australia," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(2), pages 55-61, 07.
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    Cited by:

    1. Edina Berlinger & György Walter, 2016. "Income Contingent Repayments How Can We Get into a Debt Trap?," Central European Business Review, Prague University of Economics and Business, vol. 2016(2), pages 37-46.
    2. Peter W Jones, 2005. "Financing For Life Long Education:For Real GDP Growth In Jamaica," Development and Comp Systems 0511022, University Library of Munich, Germany.
    3. Bussink, Henri & ter Weel, Bas, 2023. "Costs and benefits of an individual learning account (ILA): A simulation analysis for the Netherlands," Economic Modelling, Elsevier, vol. 118(C).
    4. Berlinger, Edina, 2005. "A nyugdíjrendszer és a diákhitelrendszer összekapcsolása [Connecting the pension and student-loan systems]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 631-647.
    5. Schwalje, Wes, 2011. "A Conceptual Model of National Skills Formation for Knowledge-based Economic Development," MPRA Paper 30302, University Library of Munich, Germany.
    6. Bussink, Henri & ter Weel, Bas, 2022. "Costs and Benefits of an Individual Learning Account (ILA): A Simulation Analysis for the Netherlands," IZA Discussion Papers 15649, Institute of Labor Economics (IZA).
    7. Kováts, Gergely, 2006. "A felsőoktatási intézmények finanszírozási modelljei [The funding models of institutes of higher education]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 919-938.
    8. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.
    9. Bosch, Gerhard, 2019. "Öffentliche Finanzierung von Weiterbildung im Strukturwandel: Vorschläge zu einem stimmigen Gesamtsystem," Working Paper Forschungsförderung 158, Hans-Böckler-Stiftung, Düsseldorf.
    10. Schwalje, Wes, 2011. "Knowledge-based Economic Development as a Unifying Vision in a Post-awakening Arab World," MPRA Paper 30305, University Library of Munich, Germany.

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