A Simulation of an Income Contingent Tuition Scheme in a Transition Economy

Milan Vodopivec

No 1247, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper takes advantage of exceptionally rich longitudinal data on the universe of labor force participants in Slovenia and simulates the working of an income contingent loan scheme to partly recover tuition costs. The simulations show that under the base variant (where the target cost recovery rate is 20 percent and the contribution rate is 2 percent), 55 percent of individuals would have repaid their entire debt within 20 years; 19 percent of individuals still would not have repaid any of their debt after 20 years; and the "leakage" of the scheme due to uncollected debt would have been 13.5 percent of total lending. By piggybacking on existing administrative systems, implementation costs would be minimal, amounting to less than 0.5 percent of collected debt.

Keywords: education; income contingent loan; tuition; simulation (search for similar items in EconPapers)
JEL-codes: C15 I28 J24 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2004-08
New Economics Papers: this item is included in nep-cmp and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Higher Education, 2009, 57 (4), 429-448

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