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The Access Implications of Income Contingent Charges for Higher Education: Lessons from Australia

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Abstract

This paper describes the Higher Education Contribution Scheme (HECS), Australia's income contingent charge mechanism, and analyses its impact on the social composition of university participation. We analyse university participation data from three cohorts of young Australians. The first cohort completed their schooling prior to the introduction of HECS, the second following its introduction and the third after the scheme was amended substantially. We find that the social composition of participants was different in 1999 from that of 1988. However, the distribution was more equal than it was in the late 1980s. That outcome reflected the growth in participation in the middle of the wealth distribution, which was stronger than growth at either the top or the bottom of the distribution. Other aspects of university participation also changed: participation grew more strongly among females than males. We find no evidence that participation fell among 'marginal decision makers' - those who, while at school, said they did not intend to study at university. We conclude that HECS did not act to discourage university participation in general or among individuals from the lowest wealth groups.

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  • Bruce Chapman & Chris Ryan, 2003. "The Access Implications of Income Contingent Charges for Higher Education: Lessons from Australia," CEPR Discussion Papers 463, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:463
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    File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP463.pdf
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    1. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643, March.
    2. Bruce Chapman & Chris Ryan, 2002. "Income-Contingent Financing of Student Charges for Higher Education: Assessing the Australian Innovation," CEPR Discussion Papers 449, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    3. 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.
    4. Barrett, Garry F & Crossley, Thomas F & Worswick, Christopher, 2000. "Consumption and Income Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 76(233), pages 116-138, June.
    5. Cowell, F.A., 2000. "Measurement of inequality," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 2, pages 87-166 Elsevier.
    6. Feldman, Roger, 1976. "Some More Problems with Income-contingent Loans: The Case of Medical Education," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1305-1311, December.
    7. Nerlove, Marc L, 1975. "Some Problems in the Use of Income-contingent Loans for the Finance of Higher Education," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 157-183, February.
    8. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Cited by:

    1. Bruce Chapman & Mark Rodrigues & Chris Ryan, 2007. "HECS for TAFE: The case for extending income contingent loans," Treasury Working Papers 2007-02, The Treasury, Australian Government, revised Apr 2007.
    2. Bruce Chapman & Mark Rodrigues & Chris Ryan, 2008. "An Analysis of FEE-HELP in the Vocational Education and Training Sector," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, pages 1-14.
    3. Kostas Mavromaras & Seamus Mcguinness & Nigel O'Leary & Peter Sloane & Yi King Fok, 2010. "The Problem Of Overskilling In Australia And Britain," Manchester School, University of Manchester, vol. 78(3), pages 219-241, June.
    4. Erfort, Olga & Erfort, Irina & Zbarazskaya, Larisa, 2016. "Financing higher education in Ukraine: The binary model versus the diversification model," International Journal of Educational Development, Elsevier, vol. 49(C), pages 330-335.
    5. Barr, Nicholas, 2009. "Financing higher education: lessons from economic theory and reform in England," LSE Research Online Documents on Economics 30873, London School of Economics and Political Science, LSE Library.
    6. Buly A Cardak & Chris Ryan, 2006. "Why are high ability individuals from poor backgrounds under-represented at university?," Working Papers 2006.04, School of Economics, La Trobe University.
    7. Eckhard Janeba & Alexander Kemnitz & Nick Ehrhart, 2007. "Studiengebühren in Deutschland: Drei Thesen und ihr empirischer Gehalt," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(2), pages 184-205, March.
    8. Erik Canton & A. Blom, 2004. "Do student loans improve accessibility to higher education and student performance? An impact study of the SOFES program in Mexico," CPB Discussion Paper 33, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Nicholas Barr, 2008. "Education : Lessons from Economic Theory and Operational Experience," EABER Working Papers 21942, East Asian Bureau of Economic Research.
    10. Buly A Cardak & Chris Ryan, 2007. "Participation in Higher Education: Equity and Access: Are Equity-based Scholarships an Answer?," Working Papers 2007.03, School of Economics, La Trobe University.
    11. Schmid, Günther, 2006. "Sharing risk: on social risk management and the governance of labour market transitions," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-101, Social Science Research Center Berlin (WZB).
    12. repec:hal:journl:dumas-00909926 is not listed on IDEAS
    13. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, Elsevier.
    14. Wales, Philip, 2013. "Access all areas? The impact of fees and background on student demand for postgraduate higher education in the UK," LSE Research Online Documents on Economics 57846, London School of Economics and Political Science, LSE Library.
    15. Blanco, Christian & Meneses, Francisco, 2013. "Impacto de la ayuda financiera en la matrícula técnica y universitaria
      [Impact of financial aid in higher education enrollment in Chile]
      ," MPRA Paper 32025, University Library of Munich, Germany, revised Oct 2012.
    16. Canton, Erik & Blom, Andreas, 2004. "Can student loans improve accessibility to higher education and student performance? An impact study of the case of SOFES, Mexico," Policy Research Working Paper Series 3425, The World Bank.
    17. John Jerrim & Anna Vignoles & Ross Finnie, 2012. "University access for disadvantaged children: A comparison across English speaking countries," DoQSS Working Papers 12-11, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    18. Winter, Stefan & Pfitztner, Alexander, 2013. "Externalities and subsidization of higher education," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79993, Verein für Socialpolitik / German Economic Association.
    19. Bruce Chapman, 2008. "The Australian University Student Financing System : The Rationale for, and Experience with, Income Contingent Loans," EABER Working Papers 21944, East Asian Bureau of Economic Research.
    20. 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.
    21. Jenny Chesters, 2010. "Has the effect of parents’ education on child’s education changed over time?," CEPR Discussion Papers 637, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    22. Buly A. Cardak & Chris Ryan, 2014. "Evidence on Credit Constraints, University Attendance and Income Contingent Loans," Melbourne Institute Working Paper Series wp2014n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    23. Philip Wales, 2013. "Access All Areas? The Impact of Fees and Background on Student Demand for Postgraduate Higher Education in the UK," SERC Discussion Papers 0128, Spatial Economics Research Centre, LSE.
    24. Barr, Nicholas, 2004. "Higher education funding," LSE Research Online Documents on Economics 288, London School of Economics and Political Science, LSE Library.
    25. Wolfram F. Richter & Berthold U. Wigger, 2012. "Besteuerung des Humanvermögens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(1-2), pages 82-102, February.

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