IDEAS home Printed from https://ideas.repec.org/a/iza/izawol/journly2016n227.html
   My bibliography  Save this article

Income contingent loans in higher education financing

Author

Listed:
  • Bruce Chapman

    (Crawford School of Public Policy, Australia)

Abstract

Around nine countries currently use a national income contingent loan (ICL) scheme for higher education tuition using the income tax system. Increased international interest in ICL validates an examination of its costs and benefits relative to the traditional financing system, government-guaranteed bank loans (GGBLs). Bank-type loans exhibit poor economic characteristics: namely, repayment hardships for the disadvantaged, and default. This damages credit reputations and can be associated with high taxpayer subsidies. ICLs avoid these problems, but effective collection of debt requires a sophisticated mechanism.

Suggested Citation

  • Bruce Chapman, 2016. "Income contingent loans in higher education financing," IZA World of Labor, Institute of Labor Economics (IZA), pages 227-227, February.
    • Handle: RePEc:iza:izawol:journl:y:2016:n:227
    as

    Download full text from publisher

    File URL: http://wol.iza.org/articles/income-contingent-loans-in-higher-education-financing-1.pdf
    Download Restriction: no
    File URL: http://wol.iza.org/articles/income-contingent-loans-in-higher-education-financing
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Crawford, Claire & Dearden, Lorraine & Micklewright, John & Vignoles, Anna, 2016. "Family Background and University Success: Differences in Higher Education Access and Outcomes in England," OUP Catalogue, Oxford University Press, number 9780199689132.
    2. Dearden, Lorraine, 2019. "Evaluating and designing student loan systems: An overview of empirical approaches," Economics of Education Review, Elsevier, vol. 71(C), pages 49-64.
    3. Chapman, Bruce & Lounkaew, Kiatanantha & Polsiri, Piruna & Sarachitti, Rangsit & Sitthipongpanich, Thitima, 2010. "Thailand's Student Loans Fund: Interest rate subsidies and repayment burdens," Economics of Education Review, Elsevier, vol. 29(5), pages 685-694, October.
    4. Chapman, Bruce & Lounkaew, Kiatanantha, 2015. "An analysis of Stafford loan repayment burdens," Economics of Education Review, Elsevier, vol. 45(C), pages 89-102.
    5. Barr, Nicholas & Chapman, Bruce & Dearden, Lorraine & Dynarski, Susan, 2019. "The US college loans system: Lessons from Australia and England," Economics of Education Review, Elsevier, vol. 71(C), pages 32-48.
    6. Bruce Chapman & Timothy Higgins & Joseph E. Stiglitz (ed.), 2014. "Income Contingent Loans," International Economic Association Series, Palgrave Macmillan, number 978-1-137-41320-8, June.
    7. Bruce Chapman & Mathias Sinning, 2014. "Student loan reforms for German higher education: financing tuition fees," Education Economics, Taylor & Francis Journals, vol. 22(6), pages 569-588, December.
    8. Joseph E. Stiglitz, 2014. "Remarks on Income Contingent Loans: How Effective can they be at Mitigating Risk?," International Economic Association Series, in: Bruce Chapman & Timothy Higgins & Joseph E. Stiglitz (ed.), Income Contingent Loans, chapter 2, pages 31-38, Palgrave Macmillan.
    9. Dynarski, Mark, 1994. "Who defaults on student loans? Findings from the National Postsecondary Student Aid Study," Economics of Education Review, Elsevier, vol. 13(1), pages 55-68, March.
    10. Jan Libich & Martin Macháček, 2017. "Insurance By Government Or Against Government? Overview Of Public Risk Management Policies," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 436-462, April.
    11. Murphy, Richard & Scott-Clayton, Judith & Wyness, Gill, 2019. "The end of free college in England: Implications for enrolments, equity, and quality," Economics of Education Review, Elsevier, vol. 71(C), pages 7-22.
    12. Bruce Chapman, 2008. "The Australian University Student Financing System : The Rationale for, and Experience with, Income Contingent Loans," EABER Working Papers 21944, East Asian Bureau of Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lergetporer, P & Woessmann, L, 2022. "Income Contingency and the Electorates Support for Tuition," CAGE Online Working Paper Series 606, Competitive Advantage in the Global Economy (CAGE).
    2. Wenhua Di & Kelly D. Edmiston, 2017. "Student Loan Relief Programs: Implications for Borrowers and the Federal Government," The ANNALS of the American Academy of Political and Social Science, , vol. 671(1), pages 224-248, May.
    3. Muinah Fadhilah & Andriyansah, 2017. "Strategic Implementation of Environmentally Friendly Innovation of Small and Medium-Sized Enterprises in Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 134-148.
    4. Del Rey, Elena & Lopez-Garcia, Miguel-Angel, 2020. "On government-created credit markets for education and endogenous growth," Economic Modelling, Elsevier, vol. 92(C), pages 170-179.
    5. Keskiner, Hilal & Gür, Bekir S., 2023. "Questioning merit-based scholarships at nonprofit private universities: Lessons from Turkey," International Journal of Educational Development, Elsevier, vol. 97(C).
    6. Yuliya Makhdievna Makhdieva, 2017. "Social/Economic Preconditions and Prospects for the Development of Education Insurance in Russia," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 160-174.
    7. Patrinos,Harry Anthony & Tanaka,Nobuyuki, 2024. "Education : Innovative Financing in Developing Countries," Education Working Papers 189695, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chapman, Bruce & Doris, Aedín, 2019. "Modelling higher education financing reform for Ireland," Economics of Education Review, Elsevier, vol. 71(C), pages 109-119.
    2. Bolhaar, Jonneke & Kuijpers, Sonny & Webbink, Dinand & Zumbuehl, Maria, 2024. "Does replacing grants by income-contingent loans harm enrolment? New evidence from a reform in Dutch higher education," Economics of Education Review, Elsevier, vol. 101(C).
    3. Lergetporer, Philipp & Woessmann, Ludger, 2022. "Income Contingency and the Electorate's Support for Tuition," IZA Discussion Papers 14991, Institute of Labor Economics (IZA).
    4. Bruce Chapman & Lorraine Dearden, 2017. "Conceptual and Empirical Issues for Alternative Student Loan Designs: The Significance of Loan Repayment Burdens for the United States," The ANNALS of the American Academy of Political and Social Science, , vol. 671(1), pages 249-268, May.
    5. Lergetporer, Philipp & Woessmann, Ludger, 2019. "The Political Economy of Higher Education Finance: How Information and Design Affect Public Preferences for Tuition," Rationality and Competition Discussion Paper Series 145, CRC TRR 190 Rationality and Competition.
    6. Dearden, Lorraine & Nascimento, Paulo Meyer, 2019. "Modelling alternative student loan schemes for Brazil," Economics of Education Review, Elsevier, vol. 71(C), pages 83-94.
    7. Gareth Bryant & Ben Spies-Butcher, 2020. "Bringing finance inside the state: How income-contingent loans blur the boundaries between debt and tax," Environment and Planning A, , vol. 52(1), pages 111-129, February.
    8. Barr, Nicholas & Chapman, Bruce & Dearden, Lorraine & Dynarski, Susan, 2019. "The US college loans system: Lessons from Australia and England," Economics of Education Review, Elsevier, vol. 71(C), pages 32-48.
    9. Bruce Chapman & Mathias Sinning, 2014. "Student loan reforms for German higher education: financing tuition fees," Education Economics, Taylor & Francis Journals, vol. 22(6), pages 569-588, December.
    10. Migali, Giuseppe, 2012. "Funding higher education and wage uncertainty: Income contingent loan versus mortgage loan," Economics of Education Review, Elsevier, vol. 31(6), pages 871-889.
    11. Jeongeun Kim & Mark Wiederspan, 2021. "Evaluating South Korea’s Introduction of an Income Contingent Loan Program," Research in Higher Education, Springer;Association for Institutional Research, vol. 62(1), pages 1-25, February.
    12. Stuart Campbell & Lindsey Macmillan & Richard Murphy & Gill Wyness, 2022. "Matching in the Dark? Inequalities in Student to Degree Match," Journal of Labor Economics, University of Chicago Press, vol. 40(4), pages 807-850.
    13. Bruce Chapman & Mathias Sinning, 2011. "Student Loan Reforms for German Higher Education: Financing Tuition Fees," Ruhr Economic Papers 0244, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    14. Chapman, Bruce & Liu, Amy Y.C., 2013. "Repayment burdens of student loans for Vietnamese higher education," Economics of Education Review, Elsevier, vol. 37(C), pages 298-308.
    15. Cai, Yu & Chapman, Bruce & Wang, Qing, 2019. "Repayment burdens of mortgage-style student loans in China and steps toward income-contingent loans," Economics of Education Review, Elsevier, vol. 71(C), pages 95-108.
    16. Hassani-Nezhad, Lena & Anderberg, Dan & Chevalier, Arnaud & Lührmann, Melanie & Pavan, Ronni, 2021. "Higher education financing and the educational aspirations of teenagers and their parents," Economics of Education Review, Elsevier, vol. 85(C).
    17. Kenneth Baldwin & Bruce Chapman & Umbu Raya, 2015. "Using Income Contingent Loans for the Financing of the Next Million Australian Solar Rooftops," ANU Working Papers in Economics and Econometrics 2015-627, Australian National University, College of Business and Economics, School of Economics.
    18. Bruce Chapman & Kiatanantha Lounkaewa, 2010. "Repayment Burdens with US College Loans," CEPR Discussion Papers 647, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    19. Stuart Campbell & Lindsey Macmillan & Richard Murphy & Gill Wyness, 2019. "Inequalities in student to course match: evidence from linked administrative data," CEP Discussion Papers dp1647, Centre for Economic Performance, LSE.
    20. Long, Ngo Van, 2019. "Financing higher education in an imperfect world," Economics of Education Review, Elsevier, vol. 71(C), pages 23-31.

    More about this item

    Keywords

    income contingent loans; government-guaranteed bank loans; consumption smoothing; default insurance; repayment burdens;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izawol:journl:y:2016:n:227. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Institute of Labor Economics (IZA) (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.