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Why Don’t We Just Give Them the Money? Financing Living Expenses of Students in Germany

In: Income Contingent Loans

Author

Listed:
  • Barbara S. Grave

    (Stifterverband, RWI)

  • Mathias Sinning

    (University of Queensland
    RWI, IZA)

Abstract

This chapter assesses the subsidies of the German student loan scheme for financing living expenses, establishes hypothetical repayment burdens in the absence of subsidies, and discusses the costs and benefits of conventional and alternative income contingent loans (ICLs). We find that the underlying subsidies of the German student loan scheme range from 57 to 80 per cent, indicating that the current scheme could be replaced by student grants if the administrative costs of collecting the debt are sufficiently high. We further demonstrate that the current scheme would either entail very high repayment burdens or very long repayment durations in the absence of loan subsidies and explain why an ICL may be viewed as a reasonable alternative to the current student loan scheme.

Suggested Citation

  • Barbara S. Grave & Mathias Sinning, 2014. "Why Don’t We Just Give Them the Money? Financing Living Expenses of Students in Germany," International Economic Association Series, in: Bruce Chapman & Timothy Higgins & Joseph E. Stiglitz (ed.), Income Contingent Loans, chapter 9, pages 109-124, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-137-41320-8_10
    DOI: 10.1057/9781137413208_10
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    Citations

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    Cited by:

    1. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of Student Financial Aid: A Microsimulation for Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145727, Verein für Socialpolitik / German Economic Association.
    2. Stefanie P. Herber & Michael Kalinowski, 2016. "Non-Take-Up of Student Financial Aid: A Microsimulation for Germany," SOEPpapers on Multidisciplinary Panel Data Research 844, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of student financial aid: A microsimulation for Germany," BERG Working Paper Series 109, Bamberg University, Bamberg Economic Research Group.
    4. Fels, Katja & Schmidt, Christoph M. & Sinning, Mathias, 2015. "BAföG Plus: Deutschlands Hochschulfinanzierung neu. Nachgelagerte Studiengebühren können die soziale Schieflage in der Bildungsfinanzierung auflösen," RWI Positionen 66, RWI - Leibniz-Institut für Wirtschaftsforschung.

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