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Free Higher Education - Regressive Transfer or Implicit Loan ?

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  • Vincent, VANDENBERGHE

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

Abstract

Should access to higher education remain ‘free’ ? Theoretical answers to this question are at least twofold. First, public higher education is said to be regressive as a priviliged minority profits from extra human capital, and all the private benefits it generates, while the general public foots the bill. A frequent reply is that higher education students enjoying ‘free’ access are implicitly borrowing public money that they pay back when entering the labour market, via progressive income taxes. Using a simple lifecycle framework this paper produces realistic estimates of how much graduates are likely to ‘reimburse” society via income tax. Using Belgian data on higher education public expenditure and income taxes paid by both graduates and non-graduates over their lifetime, we show that the implicit reimbursement rate ranges from 37% to 95%. It is much higher for bachelors than master graduates, and for males

Suggested Citation

  • Vincent, VANDENBERGHE, 2005. "Free Higher Education - Regressive Transfer or Implicit Loan ?," Discussion Papers (ECON - Département des Sciences Economiques) 2005031, Université catholique de Louvain, Département des Sciences Economiques.
    • Handle: RePEc:ctl:louvec:2005031
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    References listed on IDEAS

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    1. Bruce Chapman, 2001. "Australian Higher Education Financing: Issues for Reform," CEPR Discussion Papers 434, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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    5. 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.
    6. John Creedy, 1995. "THE EcoNOMICS OF HIGHER EDUCATION," Books, Edward Elgar Publishing, number 111, March.
    7. Bas Jacobs, 2002. "An investigation of education finance reform; graduate taxes and income contingent loans in the Netherlands," CPB Discussion Paper 9.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Johnstone, D. Bruce, 2004. "The economics and politics of cost sharing in higher education: comparative perspectives," Economics of Education Review, Elsevier, vol. 23(4), pages 403-410, August.
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    Keywords

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    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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