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Income Contingent Student Loans for Thailand: Alternatives Compared

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  • Bruce Chapman
  • Kiatanantha Lounkaew

Abstract

This paper illustrates the extent of implicit taxpayer subsidies under four possible income contingent loan (ICL) arrangements for Thailand: TICAL, implemented in 2007 only, a variant of TICAL, and two alternative ICL schemes. The implicit taxpayer subsidy calculated with respect to average graduate earnings for TICAL-type arrangements is between 25-40 per cent; however, the average implicit subsidies for the two alternatives are close to zero. When account is taken of disaggregated graduate earnings, the subsidies for TICALtype schemes increase to about 30-55 per cent. The subsidy is between 3-18 per cent for our alternative ICLs, depending on the form of the real rate of interest incurred. These results show that there is a viable ICL alternative to TICAL, which are of greatest benefit for low levels of debt. When the debt is relatively large the subsidies of even well designed schemes can be as high as 50 per cent.

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Bibliographic Info

Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 595.

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Date of creation: Jan 2009
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Handle: RePEc:auu:dpaper:595

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Keywords: income contingent loans; student loans; higher education financing;

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References

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  1. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc.
  2. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, Elsevier.
  3. Johnstone, D. Bruce, 2004. "The economics and politics of cost sharing in higher education: comparative perspectives," Economics of Education Review, Elsevier, vol. 23(4), pages 403-410, August.
  4. Bruce Chapman & Andrew Leigh, 2006. "Do Very High Tax Rates Induce Bunching? Implications for the Design of Income-Contingent Loan Schemes," CEPR Discussion Papers 521, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  5. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  6. Bruce Chapman & Kiatanantha Lounkaew & Piruna Polsiri & Rangsit Sarachitti & Thitima Sitthipongpanich, 2009. "Thailand’s Student Loan Fund: An Analysis of Interest Rate Subsidies and Repayment Hardships," CEPR Discussion Papers 592, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  7. Dynarski, Mark, 1994. "Who defaults on student loans? Findings from the National Postsecondary Student Aid Study," Economics of Education Review, Elsevier, vol. 13(1), pages 55-68, March.
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Cited by:
  1. Bruce Chapman & Mathias Sinning, 2011. "Student Loan Reforms for German Higher Education: Financing Tuition Fees," Ruhr Economic Papers 0244, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Migali, Giuseppe, 2012. "Funding higher education and wage uncertainty: Income contingent loan versus mortgage loan," Economics of Education Review, Elsevier, vol. 31(6), pages 871-889.
  3. Higgins, Tim & Sinning, Mathias, 2013. "Modeling Income Dynamics for Public Policy Design: An Application to Income Contingent Student Loans," IZA Discussion Papers 7556, Institute for the Study of Labor (IZA).
  4. Bruce Chapman & Amy Y. C. Liu, 2013. "Repayment Burdens of Student Loans for Vietnamese Higher Education," Crawford School Research Papers 1306, Crawford School of Public Policy, The Australian National University.
  5. repec:got:cegedp:137 is not listed on IDEAS
  6. Bruce Chapman & Kiatanantha Lounkaew & Piruna Polsiri & Rangsit Sarachitti & Thitima Sitthipongpanich, 2009. "Thailand’s Student Loan Fund: An Analysis of Interest Rate Subsidies and Repayment Hardships," CEPR Discussion Papers 592, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  7. Booij, A.S. & Leuven, E. & Oosterbeek, H., 2010. "The role of information in the take-up of student loans," Working Papers 32, Top Institute for Evidence Based Education Research.
  8. Schwager, Robert, 2012. "Student loans in a tiebout model of higher education," Center for European, Governance and Economic Development Research Discussion Papers 137, University of Goettingen, Department of Economics.
  9. Bruce Chapman & Kiatanantha Lounkaewa, 2010. "Repayment Burdens with US College Loans," CEPR Discussion Papers 647, Centre for Economic Policy Research, Research School of Economics, Australian National University.

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