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Australian Student Loans

Author

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  • Bruce J. Chapman
  • Ann Harding

Abstract

The Australian Government introduced the so‐called ‘AUSTUDY Supplement’ in the 1992–93 budget. The scheme gives AUSTUDY recipients the option of trading in up to $2000 per year of their grant for $4000 of an income‐contingent loan, to be paid back according to the current HECS arrangements, implying that the Government is acting as an insurer against future default by students. This article addresses the theoretical basis of the scheme, and explores two related questions: will it be in the financial interests of average students to take up the option? and what is likely to be the take‐up rate of loans? Through the use of both cross‐sectional data and the HARDING microsimulation model it is demonstrated that for many students the loan option will result in financial advantages, and that the take‐up rate is likely eventually to be high.

Suggested Citation

  • Bruce J. Chapman & Ann Harding, 1993. "Australian Student Loans," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 26(1), pages 61-75, January.
    • Handle: RePEc:bla:ausecr:v:26:y:1993:i:1:p:61-75
    DOI: 10.1111/j.1467-8462.1993.tb00772.x
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    Cited by:

    1. Berlinger, Edina, 2002. "A jövedelemarányos törlesztésű diákhitel egyszerű modellje [A simple model of student credit with repayments proportionate to income]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1042-1062.
    2. Daina McDonald, 2006. "150 Issues of The Australian Economic Review: The Changing Face of a Journal over Time," Melbourne Institute Working Paper Series wp2006n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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