Financing schemes for higher education
(2010) European Journal of Political Economy — Vol. 26, n° 1, p. 104-113 (2010)
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- Authors
- Abstract
- Most industrial countries have traditionally subsidized the provision of higher education. Alternative financing schemes, which rely on larger contributions from students, are being increasingly adopted. Those based on income-contingent loans provide insurance against uncertain educational outcomes. We consider a unified framework where we analyze the following schemes: 1) the traditional tax-subsidy, 2) pure loans, 3) income-contingent loans with risk-sharing, and 4) income-contingent loans with risk-pooling. We focus on their insurance role and their effect on higher education participation. We show that an income-contingent loan with risk-pooling can induce the optimal level of participation provided that it covers both financial costs of education and forgone earnings.
- Affiliations
Universitat de Girona Departament d'Economia School of Economics Australian National University
Citations
Del Rey Canteli, E., & Racionero, M. (2010). Financing schemes for higher education. European Journal of Political Economy, 26(1), 104-113. https://doi.org/10.1016/j.ejpoleco.2009.09.002 (Original work published 2010)