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Refinancing Europe's higher education through deferred and income-contingent fees: An empirical assessmentusing Belgian, German & UK data

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  • Vandenberghe, Vincent
  • Debande, Olivier

Abstract

The arguments for refinancing the European Union's (EU) higher education via higher tuition fees largely rest on preserving the profitability of the educational investment and offering deferred and income-contingent payments. Using income survey datasets on Belgium, Germany and the United Kingdom (UK) we first estimate how graduates' private return on educational investment is likely to be affected by higher private contributions. We then evaluate the effect of income-contingent and deferred payment mechanisms on lifetime net income and its capacity to account for graduates' ability to pay, considering numerous ways of financing the cost of introducing income-contingency. Our analysis reveals that increasing individuals' contributions to higher education costs, through income-contingent and deferred instruments, does not significantly affect the private rate of return of heterogeneous graduates, allows for payments to be indexed to ability to pay, and can be implemented in ways that minimize the risk of adverse selection. These findings prove robust to significant variations between countries' unharmonised higher education institutional structures.

Suggested Citation

  • Vandenberghe, Vincent & Debande, Olivier, 2008. "Refinancing Europe's higher education through deferred and income-contingent fees: An empirical assessmentusing Belgian, German & UK data," European Journal of Political Economy, Elsevier, vol. 24(2), pages 364-386, June.
  • Handle: RePEc:eee:poleco:v:24:y:2008:i:2:p:364-386
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    4. Rappai, Gábor & Rekettye, Gábor, 2011. "Pricing Policies at Public Universities in Hungary," Apas Papers 350, Academic Public Administration Studies Archive - APAS.
    5. 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.

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