HECS for TAFE: The case for extending income contingent loans

Bruce Chapman, Mark Rodrigues and Christopher Ryan
Additional contact information
Mark Rodrigues: Australia and New Zealand Banking Group Limited

No 2007-02, Treasury Working Papers from The Treasury, Australian Government

Abstract: The public vocational education and training (VET) system is now one of the few areas in Australia's tertiary education system where students are required to pay up-front fees without access to loan assistance. These arrangements may lead to sub-optimal educational outcomes to the extent that prospective students reject a VET education on the basis of short-term financial constraints. In this paper we present a case for introducing an income contingent loan to the VET sector. The economic rationale is similar to that for higher education, and the Higher Education Contribution Scheme (HECS) provides a useful template. Using data from the first three waves of the Household Income and Labour Dynamics in Australia (HILDA) survey, we establish that there are indeed significant private returns to VET qualifications. An income contingent loan is argued to enhance access to these benefits, and the collection streams are analysed for different qualifications. The form that an income contingent loan might take for VET is considered, as are the implications for the Commonwealth Government with respect to potential subsidies associated with the design parameters.

Keywords: educational finance; educational economics; vocational education (search for similar items in EconPapers)
JEL-codes: I22 I28 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2007-04, Revised 2007-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.treasury.gov.au/~/media/Treasury/Public ... F/TWP%202007-02.ashx First version, 2007 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2007/Working%20Paper%202007%2002/Downloads/PDF/TWP%202007-02.ashx [301 Moved Permanently]--> https://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2007/Working%20Paper%202007%2002/Downloads/PDF/TWP%202007-02.ashx [301 Moved Permanently]--> https://treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2007/Working%20Paper%202007%2002/Downloads/PDF/TWP%202007-02.ashx)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tsy:wpaper:wpaper_tsy_wp_2007_2

Access Statistics for this paper

More papers in Treasury Working Papers from The Treasury, Australian Government Contact information at EDIRC.
Bibliographic data for series maintained by The Treasury (Commonwealth of Australia) ().