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We propose a simple theoretical model which shows how the combined effect of wage uncertainty and risk aversion can modify the individual willingness to pay for a HE system financed by an [income contingent loan] ICL or a [mortgage loan] ML. We calibrate our model using real data from the 1970 British Cohort Survey together with the features of the English HE financing system. We allow for individual heterogeneity by considering different family backgrounds and occupations. We find that graduates from poor families, males and graduates working in the private sector are more willing to pay to switch to an ICL. Using the UK Labour Force Survey we evaluate the distributive effects of our model. We compute the repayment burdens and taxpayer subsidies for average, low and high earnings graduates. The results confirm the important insurance benefits of an ICL compared to a ML, with lower burdens and higher subsidies for poorer graduates.

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The Thai higher education sector has expanded quickly during the past decade, making a transition from an elitist to a mass institution. A driving force behind the expansion was believed to be the Student Loan Fund (SLF), introduced in 1996. During the first 10 years of its operation, the SLF has lent to more than 2.6 million students, with the loan value totaling 5.7 billion dollars. However, there has been no systematic evaluation of the scheme. This paper provides a very first attempt to evaluate the SLF. We found that it had serious weaknesses in terms of loan screening; delay in loan disbursement and low collection rate. We also found that it failed to promote enrollment in higher education, except for students from poor households.

Published abstract reprinted from ‘Economics of education review’, copyright 2010, with permission from Elsevier. Show less

The degree to which students are able to make adequate repayments on their student loans and avoid default is of special concern for colleges. If too many former students go into default, the college will face sanctions by the federal government and lose eligibility to provide currently enrolled students federal financial aid, such as the Pell grant. To avoid these sanctions, some colleges have chosen not to participate in federal loan programs by excluding loans from students' financial aid packages. In this article, [the author] investigates the student-level impacts associated with the decision of community colleges to opt out of the Stafford loan program. Utilizing administrative records from over 50 community colleges located in a single state, [the author] estimates the within-college differences in outcomes for Pell-eligible students before and after an institution opts out of the federal loan program. [The author] finds that Pell-eligible students enrolling when the community college offered federal loans were 7.6 percentage points more likely to borrow than Pell-eligible students who enrolled when the institutions opted out. Overall, borrowing also increased by 368 US dollars a year. [The author] also finds that students borrowing a loan attempted 19 additional credits in their first year of enrollment and were more likely to attempt and complete math and science courses than non-borrowers.

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The Hungarian student loan system was introduced in 2001. It has four main attributes: universal access and universal conditions; income contingent repayment; private funding; and self-sustaining (zero-profit) operation without direct state subsidy. This latter characteristic makes the scheme quite unique in international practice. Empirical facts support the original idea: default rate is relatively low (1-2 per cent), administration costs per year are around one per cent of the portfolio value. This paper focuses on three issues: how the Hungarian model works; why a ‘specialized institution’ model is superior to a ‘retail bank’ model; and finally, why adverse selection is not as menacing as the literature may suggest.

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This paper examines the potential costs and benefits associated with a risk-sharing policy imposed on all higher education institutions. Under such a program, institutions would be required to pay for a portion of the student loans among which their students defaulted. [The author examines] the predicted institutional responses under a variety of possible penalties and institutional characteristics using a straightforward model of institutional behavior based on monopolistic competition. [The author also examines] the impact of a risk-sharing program on overall economic efficiency by estimating the returns to scale for undergraduate enrollment (as well as other outputs) among each of 10 educational sectors. [The authors'] estimates suggest that a risk-sharing program would induce only a modest tuition increase, with considerable heterogeneity across sectors. Two different penalty structures are analyzed in the context of the model, and alternative institutional responses such as tuition discounting and credit rating students are discussed.

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Purpose: In an effort to boost participation in vocational education and training (VET), in 2009, the Australian Government launched its VET FEE-HELP income-contingent loan programme for VET students. The programme was terminated in 2016 following numerous failed attempts to arrest its escalating costs and improve its performance. In an effort to shed light on the failure of the VET FEE-HELP programme, in this paper, the authors offer estimates of the aggregate costs involved and the quantum of graduates.

Design/methodology/approach: In this paper, the authors examined the VET FEE-HELP programme through the analytical lens offered by Marsh and McConnell's (2010) framework, which offered a broad, 'big-picture' view covering three dimensions of policy success or failure.

Findings: By identifying the causes of the failure, the authors concluded that the features of the scheme designed to improve accessibility of VET also allowed for exploitative behaviour on the part of VET providers, causing deterioration in training quality and leading to a substantial amount of wasteful public expenditure.

Originality/value: The authors seek to illuminate the demise of the hitherto neglected programme to contribute towards the literature on Australian Government failure.

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Government policy towards financial support for students means that students increasingly have to bear the costs of their education, often through acquiring significant student debt. This policy is largely justified with reference to the private benefits (through enhanced life-time earnings) that university graduates can expect to enjoy. Using evidence from a qualitative study of 49 students, this paper analyses the extent to which students are engaged in a process of rational weighing-up of the costs and benefits of higher education as implied by the policy stance. It also explores their interpretation of their financial position and Government policy towards them. It argues that students are very poorly informed about both the costs and benefits of higher education, and that financial outcomes are not created in an essentially private and individual fashion, but instead are strongly mediated by cultural and familial resources.

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Using an original dataset collected at a Chinese university and adopting a difference-in-differences research design, this study draws causal inferences regarding the effect of the Government-Subsidized Student Loan Program (GSSLP) on financially needy students at Chinese higher education institutions. Specifically, this study finds that the program may have enabled financially needy students to spend 527.80 Chinese yuan more on food and take 26 hours less paid work on average during one academic year. In other words, the GSSLP has been found to have had positive impact on financially needy students' basic needs such as food and work. In order for the program to have greater impact on such students' overall quality of life, policy-makers should make efforts to increase maximum loan amounts. This will enable students from low income families to spend more on educational resources and reduce their finance-related anxiety.

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In this article the focus is on the university sector, and data from different surveys is used to present a detailed view of student expenditure. In this context, a student means someone enrolled in a Master’s program. Direct costs of study are given, and the National Economic Support Scheme for Students is described. Other direct and indirect means of financial support (for example subsidised student canteens, student health services and discount on travel) are looked at and the role of student contributions and parental support is discussed. The article concludes by describing some relevant issues in the recent debate on student funding. Show less

We examine whether there is discernable variation in the matriculation patterns of low-income students at public flagship institutions around changes in institutional financial-aid policies that target resident, low-income students with need-based aid. Overall, our results suggests that need is not being met on the extensive margin and that enrollment levels actually fall with the introduction of targeted aid. However, the enrollments of more-needy students tend to fall less and students matriculating to aid-innovating institutions tend to have more financial need after the introduction of income-targeted aid. This suggests that along the intensive margin income-targeted aid may still be benefiting the most needy. We also find that institutions that introduce income-targeted aid subsequently enroll more-geographically distant students, suggestive of improved matching.

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