Deferring higher education fees without relying on contributions from non-students

Elena Del Rey

Education Economics, 2011, vol. 20, issue 5, 510-521

Abstract: The benefits of deferring the payment of higher-education costs are increasingly acknowledged as a way to overcome student-borrowing constraints. Since higher education is a risky investment and students are generally risk averse, the repayment arrangements proposed in the literature frequently include some insurance. In a competitive environment, preventing adverse selection may require coercion to join the scheme or the use of public funds (i.e. contributions from non-students) to make the scheme attractive to all students. Alternatively, when the number of higher-ability students is low, students can be given the option to choose among arrangements that include different degrees of insurance.

Date: 2011
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DOI: 10.1080/09645292.2011.592361

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