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Student Loan Reforms for German Higher Education: Financing Tuition Fees

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  • Chapman, Bruce
  • Sinning, Mathias

Abstract

It is generally agreed that the funding base for German universities is inadequate and perhaps the time has come for serious consideration of the imposition of nontrivial tuition charges. Against this background, this paper compares conventional and income contingent loans for financing tuition fees at German universities. With the use of unconditional age-income quantile regression approaches our analysis considers two critical aspects of the loan debate: the size of repayment burdens associated with normal mortgage-style loans, and the time structure of revenue to the government from a hypothetical income contingent loan scheme. It is found that tuition fees at German universities could increase considerably with the use of an income contingent loan system based on current policy approaches used in Australia, England and New Zealand.

Suggested Citation

  • Chapman, Bruce & Sinning, Mathias, 2011. "Student Loan Reforms for German Higher Education: Financing Tuition Fees," Ruhr Economic Papers 244, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:244
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    References listed on IDEAS

    as
    1. Barr, Nicholas, 2001. "The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State," OUP Catalogue, Oxford University Press, number 9780199246595.
    2. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
    3. Chapman, Bruce & Lounkaew, Kiatanantha & Polsiri, Piruna & Sarachitti, Rangsit & Sitthipongpanich, Thitima, 2010. "Thailand's Student Loans Fund: Interest rate subsidies and repayment burdens," Economics of Education Review, Elsevier, vol. 29(5), pages 685-694, October.
    4. Chapman, Bruce & Lounkaew, Kiatanantha, 2010. "Income contingent student loans for Thailand: Alternatives compared," Economics of Education Review, Elsevier, vol. 29(5), pages 695-709, October.
    5. Rothstein, Jesse & Rouse, Cecilia Elena, 2011. "Constrained after college: Student loans and early-career occupational choices," Journal of Public Economics, Elsevier, vol. 95(1), pages 149-163.
    6. Bruce Chapman & Andrew Leigh, 2009. "Do Very High Tax Rates Induce Bunching? Implications for the Design of Income Contingent Loan Schemes," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 276-289, September.
    7. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    8. 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.
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Tom McKenzie & Dirk Sliwka, 2011. "Universities as Stakeholders in their Students' Careers: On the Benefits of Graduate Taxes to Finance Higher Education," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(4), pages 726-742, December.
    2. Jan Kluge & Michael Weber, 2015. "Decomposing the German East-West wage gap," ifo Working Paper Series 205, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Bruce Chapman & Lorraine Dearden, 2022. "Income-contingent loans in higher education financing," IZA World of Labor, Institute of Labor Economics (IZA), pages 227-227, October.
    4. Hügle, Dominik, 2020. "Higher education funding in Germany: A distributional lifetime perspective," Discussion Papers 2021/1, Free University Berlin, School of Business & Economics.
    5. repec:got:cegedp:137 is not listed on IDEAS
    6. Timo Mitze & Claudia Burgard & Bjoern Alecke, 2013. "The Effect of Tuition Fees on Student Enrollment and Location Choice: Interregional Migration, Border Effects and Gender Differences," ERSA conference papers ersa13p883, European Regional Science Association.
    7. Schwager, Robert, 2012. "Student loans in a tiebout model of higher education," University of Göttingen Working Papers in Economics 137, University of Goettingen, Department of Economics.
    8. Stephan Thomsen & Friederike von Haaren-Giebel, 2016. "Did tuition fees in Germany constrain students’ budgets? New evidence from a natural experiment," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-25, December.
    9. Elza Elmira & Daniel Suryadarma, "undated". "Financing Higher Education in Indonesia: Assessing the Feasibility of an Income-Contingent Loan System," Working Papers 1882, Publications Department.
    10. Abbas Bazargan & Mohammad Eftekhar Ardebili & Mohammad Zarei & Rohollah Ghasemi, 2017. "The Relationship Between ‘Higher Education and Training’ and ‘Business Sophistication’," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(2), pages 319-341, Spring.
    11. Aurora Ortiz-Nuñez, 2014. "Attitudes Toward Risk And Socioeconomic Factors Related To Educational Loans," Contemporary Economic Policy, Western Economic Association International, vol. 32(4), pages 710-718, October.
    12. Fels, Katja & Schmidt, Christoph M. & Sinning, Mathias, 2015. "BAföG Plus: Deutschlands Hochschulfinanzierung neu. Nachgelagerte Studiengebühren können die soziale Schieflage in der Bildungsfinanzierung auflösen," RWI Positionen 66, RWI - Leibniz-Institut für Wirtschaftsforschung.

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    More about this item

    Keywords

    educational finance; student financial aid; state and federal aid; government expenditures on education;
    All these keywords.

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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