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Modelling Higher Education Financing Reform for Ireland

Author

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  • Aedin Doris

    () (Department of Economics, Finance and Accounting, Maynooth University.)

  • Bruce Chapman

    (Australian National University)

Abstract

This paper examines the feasibility of various alternative potential student loan schemes for Ireland. Using National Employment Survey data for 2006, we model the life-cycle earnings distribution for Irish graduates. We then use these estimates to simulate the effects of alternative types of student loans, including mortgage-type (government guaranteed bank) loans and income-contingent loans of various designs, incorporating participation and migration patterns into the simulations. The results show that mortgage-type loans entail unsustainably high repayment rates for low income graduates. Through the specification of several alternative income-contingent loan schemes, it is demonstrated that this approach to higher education financing is feasible in terms of affordability for graduates and with respect to implied government subsidies. There are some important policy design issues to be addressed and we conclude with some recommendations for a future Irish scheme.

Suggested Citation

  • Aedin Doris & Bruce Chapman, 2016. "Modelling Higher Education Financing Reform for Ireland," Economics, Finance and Accounting Department Working Paper Series n271-16.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  • Handle: RePEc:may:mayecw:n271-16.pdf
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    References listed on IDEAS

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    1. Aedín Doris & Donal O’Neill & Olive Sweetman, 2015. "Wage flexibility and the great recession: the response of the Irish labour market," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    2. Bruce Chapman & Tim Higgins, 2013. "The Costs of Unpaid Higher Education Contribution Scheme Debts of Graduates Working Abroad," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 286-299, September.
    3. Gibson, John & McKenzie, David, 2011. "The microeconomic determinants of emigration and return migration of the best and brightest: Evidence from the Pacific," Journal of Development Economics, Elsevier, vol. 95(1), pages 18-29, May.
    4. Darragh Flannery & Cathal O’Donoghue, 2011. "The Life-cycle Impact of Alternative Higher Education Finance Systems in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 42(3), pages 237-270.
    5. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-489, October.
    6. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.),Handbook of the Economics of Education, edition 1, volume 2, chapter 25, pages 1435-1503, Elsevier.
    7. Cansin Arslan & Jean-Christophe Dumont & Zovanga Kone & Yasser Moullan & Caglar Ozden & Christopher Parsons & Theodora Xenogiani, 2015. "A New Profile of Migrants in the Aftermath of the Recent Economic Crisis," OECD Social, Employment and Migration Working Papers 160, OECD Publishing.
    8. 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.
    9. 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.
    10. Denny, Kevin, 2014. "The effect of abolishing university tuition costs: Evidence from Ireland," Labour Economics, Elsevier, vol. 26(C), pages 26-33.
    11. Chapman, Bruce & Lounkaew, Kiatanantha, 2015. "An analysis of Stafford loan repayment burdens," Economics of Education Review, Elsevier, vol. 45(C), pages 89-102.
    12. Conefrey, Thomas & Smith, Richard, 2014. "On the Slide? Salary Scales for New Graduates 2004-2012," Economic Letters 01/EL/14, Central Bank of Ireland.
    13. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    14. Chapman, Bruce & Liu, Amy Y.C., 2013. "Repayment burdens of student loans for Vietnamese higher education," Economics of Education Review, Elsevier, vol. 37(C), pages 298-308.
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    Cited by:

    1. Dearden, Lorraine & Nascimento, Paulo Meyer, 2019. "Modelling alternative student loan schemes for Brazil," Economics of Education Review, Elsevier, vol. 71(C), pages 83-94.
    2. Sarbjeet Kaur & Gurcharan Singh, 2020. "Financial Comparative Analysis of State Public Universities of Punjab," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 140-144.
    3. Cai, Yu & Chapman, Bruce & Wang, Qing, 2019. "Repayment burdens of mortgage-style student loans in China and steps toward income-contingent loans," Economics of Education Review, Elsevier, vol. 71(C), pages 95-108.

    More about this item

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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