Funding higher education and wage uncertainty: income contingent loan versus mortgage loan

Individual risk aversion and riskiness of investment in higher education (HE) are combined with two alternative loan-based financing systems, income contingent loans (ICL) and mortgage loans (ML), to investigate the effects on graduate lifetime expected utilities. We deal explicitly with the presence of hidden subsidies due to discounting, which is one of the main drawbacks of an ICL. The theoretical model has been calibrated using real data on graduate earnings and their volatility, together with the features of the English HE financing system, which has recently switched from a ML to an ICL ... Show more

Authors: Migali, Giuseppe

Corporate authors: Lancaster University Management School (LUMS)

Published: Lancaster, England, LUMS, 2010

Resource type: Report, paper or authored book

Physical description: 31 p.

Access item: http://web.archive.org/web/20101203203608/http://www.lums.lancs.ac.uk/publications/abstract/006705/ Request Item from NCVER

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Subjects: Higher educationFinanceStudentsIncome

Keywords: GraduatesInvestmentFundingWage

Geographic subjects: Great BritainEnglandEurope

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