Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard
AbstractAn income-contingent loan scheme can at best replicate the allocation brought about by a scholarship scheme financed by a graduate tax, and only on condition that there is nothing to stop the policy maker from using tuition fees as if they were taxes. If that is not possible, even the best loan scheme will exclude some well-qualified school leaver from university. Even if individual study effort is observable, but more so if it is not, it is not socially desirable that all students should specialize in the subjects that promise the highest graduate earnings. Copyright � 2009 Wiley Periodicals, Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 11 (2009)
Issue (Month): 1 (02)
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Other versions of this item:
- Alessandro Cigno & Annalisa Luporini, 2003. "Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard," CESifo Working Paper Series 973, CESifo Group Munich.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
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