Financing schemes for higher education
AbstractMost industrial countries have traditionally subsidized the provision of higher education. Alternative financing schemes, which rely on larger contributions from students, are being increasingly adopted. Those based on income-contingent loans provide insurance against uncertain educational outcomes. We consider a unified framework where we analyze the following schemes: 1) the traditional tax-subsidy, 2) pure loans, 3) income-contingent loans with risk-sharing, and 4) income-contingent loans with risk-pooling. We focus on their insurance role and their effect on higher education participation. We show that an income-contingent loan with risk-pooling can induce the optimal level of participation provided that it covers both financial costs of education and forgone earnings.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 26 (2010)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/505544
Efficiency Higher education finance;
Other versions of this item:
- I2 - Health, Education, and Welfare - - Education
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
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