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HECS for TAFE: The case for extending income contingent loans

Author

Listed:
  • Bruce Chapman

    (Crawford School of Economics and Government, Australian National University)

  • Mark Rodrigues

    (Australia and New Zealand Banking Group Limited)

  • Chris Ryan

    (Research School of Social Sciences, Australian National University)

Abstract

The public vocational education and training (VET) system is now one of the few areas in Australia's tertiary education system where students are required to pay up-front fees without access to loan assistance. These arrangements may lead to sub-optimal educational outcomes to the extent that prospective students reject a VET education on the basis of short-term financial constraints. In this paper we present a case for introducing an income contingent loan to the VET sector. The economic rationale is similar to that for higher education, and the Higher Education Contribution Scheme (HECS) provides a useful template. Using data from the first three waves of the Household Income and Labour Dynamics in Australia (HILDA) survey, we establish that there are indeed significant private returns to VET qualifications. An income contingent loan is argued to enhance access to these benefits, and the collection streams are analysed for different qualifications. The form that an income contingent loan might take for VET is considered, as are the implications for the Commonwealth Government with respect to potential subsidies associated with the design parameters.

Suggested Citation

  • Bruce Chapman & Mark Rodrigues & Chris Ryan, 2007. "HECS for TAFE: The case for extending income contingent loans," Treasury Working Papers 2007-02, The Treasury, Australian Government, revised Apr 2007.
    • Handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2007_2
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. 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(02), pages 55-61, July.
    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.
    3. repec:ces:ifodic:v:5:y:2007:i:2:p:14567392 is not listed on IDEAS
    4. 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.

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    More about this item

    Keywords

    educational finance; educational economics; vocational education;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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