Introduction and Summary

Bruce Chapman, Timothy Higgins and Joseph Stiglitz
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Timothy Higgins: The Australian National University

A chapter in Income Contingent Loans, 2014, pp 1-11 from Palgrave Macmillan

Abstract: Abstract In 1989 the Australian government introduced the first university tuition-loan program in which debts would be collected through the income tax system depending on the participant’s income.1 The policy, known as the Higher Education Contribution Scheme (HECS) is an arrangement known as an income contingent loan (ICL), a debt that differs critically from ‘normal’ loans in that repayments occur if and only when debtors’ incomes reach a given level. Eight other countries have since adopted similar student loan schemes and, at the time of writing, there is a Bill (the Earnings Contingent Education Loans (ExCEL) Act) under bi-partisan consideration in the US Congress which, if passed, would have the effect of introducing a broadly-based ICL. It is generally agreed that ICL policies for higher education financing have worked effectively from the perspective of equity and efficiency, and from a transactional perspective.

Keywords: High Education; Moral Hazard; Adverse Selection; Parental Leave; Unemployment Insurance (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-137-41320-8_1

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DOI: 10.1057/9781137413208_1

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