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Optimal design for study-abroad scholarship: the effect of payback policy

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  • Donald Lien
  • Yaqin Wang

Abstract

This paper examines the optimal design for a study-abroad scholarship. A student is awarded a fixed-amount scholarship to participate in the program but will have to pay back the scholarship if his/her performance fails to meet a target level. When the program is highly productive, the scholarship is low and the target performance is high. The opposite case prevails if the disutility from studying is high. A higher program cost leads to a higher target performance and a cost sharing between the university and the students. When the uncertainty regarding performance evaluation in the program increases, the target performance decreases while the scholarship amount is higher.

Suggested Citation

  • Donald Lien & Yaqin Wang, 2010. "Optimal design for study-abroad scholarship: the effect of payback policy," Education Economics, Taylor & Francis Journals, vol. 18(2), pages 191-205.
    • Handle: RePEc:taf:edecon:v:18:y:2010:i:2:p:191-205
    DOI: 10.1080/09645290902796373
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    References listed on IDEAS

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    1. Laura Thissen & Sjef Ederveen, 2006. "Higher education; time for coordination on a European level?," CPB Discussion Paper 68, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Hessel Oosterbeek & Dinand Webbink, 2006. "Assessing the returns to studying abroad," CPB Discussion Paper 64, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Messer, Dolores & Wolter, Stefan C., 2005. "Are Student Exchange Programs Worth It?," IZA Discussion Papers 1656, IZA Network @ LISER.
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