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Deferring higher education fees without relying on contributions from non-students

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  • Elena Del Rey

Abstract

The benefits of deferring the payment of higher-education costs are increasingly acknowledged as a way to overcome student-borrowing constraints. Since higher education is a risky investment and students are generally risk averse, the repayment arrangements proposed in the literature frequently include some insurance. In a competitive environment, preventing adverse selection may require coercion to join the scheme or the use of public funds (i.e. contributions from non-students) to make the scheme attractive to all students. Alternatively, when the number of higher-ability students is low, students can be given the option to choose among arrangements that include different degrees of insurance.

Suggested Citation

  • Elena Del Rey, 2011. "Deferring higher education fees without relying on contributions from non-students," Education Economics, Taylor & Francis Journals, vol. 20(5), pages 510-521, May.
    • Handle: RePEc:taf:edecon:v:20:y:2011:i:5:p:510-521
    DOI: 10.1080/09645292.2011.592361
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    References listed on IDEAS

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    1. Panu Poutvaara, 2008. "Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 591-608, September.
    2. Del Rey, Elena & Racionero, María, 2010. "Financing schemes for higher education," European Journal of Political Economy, Elsevier, vol. 26(1), pages 104-113, March.
    3. Alessandro Cigno & Annalisa Luporini, 2009. "Scholarships or Student Loans? Subsidizing Higher Education in the Presence of Moral Hazard," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(1), pages 55-87, February.
    4. Alexander Kemnitz, 2007. "University Funding Reform, Competition, and Teaching Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 356-378, June.
    5. 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.
    6. Bas Jacobs & Sweder J. G. van Wijnbergen, 2007. "Capital-Market Failure, Adverse Selection, and Equity Financing of Higher Education," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 1-32, March.
    7. Barr, Nicholas, 1993. "Alternative Funding Resources for Higher Education," Economic Journal, Royal Economic Society, vol. 103(418), pages 718-728, May.
    8. Banerji, Sanjay, 1995. "Interlinkage, investment and adverse selection," Journal of Economic Behavior & Organization, Elsevier, vol. 28(1), pages 11-21, September.
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    Cited by:

    1. Maria Racionero & Elena Del Rey, 2012. "Choosing the type of income-contingent loan: risk-sharing versus risk-pooling," CEPR Discussion Papers 671, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. Maria Racionero & Elena Del Rey, 2012. "Choosing the type of income-contingent loan: risk-sharing versus risk-pooling," CEPR Discussion Papers 671, Centre for Economic Policy Research, Research School of Economics, Australian National University.

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