Optimal design for study-abroad scholarship: the effect of payback policy

Donald Lien and Yaqin Wang

Education Economics, 2010, vol. 18, issue 2, 191-205

Abstract: This paper examines the optimal design for a study-abroad scholarship. A student is awarded a fixed-amount scholarship to participate in the program but will have to pay back the scholarship if his/her performance fails to meet a target level. When the program is highly productive, the scholarship is low and the target performance is high. The opposite case prevails if the disutility from studying is high. A higher program cost leads to a higher target performance and a cost sharing between the university and the students. When the uncertainty regarding performance evaluation in the program increases, the target performance decreases while the scholarship amount is higher.

Keywords: study-abroad scholarship; optimal payback policy (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1080/09645290902796373

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