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