Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/274619 
Year of Publication: 
2022
Citation: 
[Journal:] IZA World of Labor [ISSN:] 2054-9571 [Article No.:] 227v2 [Year:] 2022
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Around ten countries currently use a variant of a national income-contingent loans (ICL) scheme for higher education tuition. Increased international interest in ICL validates an examination of its costs and benefits relative to the traditional financing system, time-based repayment loans (TBRLs). TBRLs exhibit poor economic characteristics for borrowers: namely high repayment burdens (loan repayments as a proportion of income) for the disadvantaged and default. The latter both damages credit reputations and can be associated with high taxpayer subsidies through continuing unpaid debts. ICLs avoid these problems as repayment burdens are capped by design, eliminating default.
Subjects: 
income-contingent loans
time-based repayment loans
consumption smoothing
default insurance
repayment burdens
JEL: 
I20
I21
I22
I23
I28
H42
Persistent Identifier of the first edition: 
Document Type: 
Article

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