Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard

Alessandro Cigno () and Annalisa Luporini

Journal of Public Economic Theory, 2009, vol. 11, issue 1, pages 55-87

Abstract: An income-contingent loan scheme can at best replicate the allocation brought about by a scholarship scheme financed by a graduate tax, and only on condition that there is nothing to stop the policy maker from using tuition fees as if they were taxes. If that is not possible, even the best loan scheme will exclude some well-qualified school leaver from university. Even if individual study effort is observable, but more so if it is not, it is not socially desirable that all students should specialize in the subjects that promise the highest graduate earnings. Copyright © 2009 Wiley Periodicals, Inc..

Date: 2009

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9779.2008.01397.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:jpbect:v:11:y:2009:i:1:p:55-87

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is edited by John P. Conley and Myrna Holtz Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory
Series data maintained by Christopher F. Baum ().