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

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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File URL: http://cbe.anu.edu.au/researchpapers/cepr/DP463.pdf
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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 463.

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Length: 40 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:auu:dpaper:463
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Web page: http://rse.anu.edu.au/cepr.php
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  1. 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 157-83, February.
  2. 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 1305-11, December.
  3. Frank Cowell, 1998. "Measurement of inequality," LSE Research Online Documents on Economics 2084, London School of Economics and Political Science, LSE Library.
  4. Garry Barrett & Thomas Crossley & Christopher Worswick, 1999. "Consumption and Income Inequality in Australia," CEPR Discussion Papers 404, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  5. repec:cup:cbooks:9780521355643 is not listed on IDEAS
  6. 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 738-51, May.
  7. 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.
  8. repec:cup:cbooks:9780521586115 is not listed on IDEAS
  9. 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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