Income contingent student loan design: Lessons from around the world

Jack Britton, Laura van der Erve and Tim Higgins

Economics of Education Review, 2019, vol. 71, issue C, 65-82

Abstract: The use of income contingent loans (ICLs) for Higher Education (HE) students is becoming increasingly prevalent around the world. Using a model of simulated lifetime earnings for graduates, in this paper we show that the impact of the design of ICLs on the magnitude and distribution of government subsidies is highly dependent on the institutional setting. In particular, the average debt level as a share of average earnings is a key determinant of the impact of various policy parameters. The variance of earnings within the graduate population is also shown to be a determinant of ICL taxpayer costs. This paper is the first comparative exercise of impact of the design of ICLs in different settings, and the findings are highly relevant to countries looking to implement or reform their student loan systems.

Keywords: Higher education funding; Educational finance; Tuition fees; Income contingent loans (search for similar items in EconPapers)
JEL-codes: H52 H81 I22 I28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoedu:v:71:y:2019:i:c:p:65-82

DOI: 10.1016/j.econedurev.2018.06.001

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