Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70209
Authors: 
Schwager, Robert
Year of Publication: 
2012
Series/Report no.: 
Discussion Papers, Center for European Governance and Economic Development Research 137
Abstract: 
A model is presented where universities competitively supply education to mobile students. Students are subject to a liquidity constraint so that tuition must be paid out of pre-university income. It is shown that student loans provided by home jurisdictions will ensure an efficient quality of higher education if loans do not contain any subsidy. If there is income-related debt relief, however, the equilibrium quality of education is inefficiently low. This is because students reduce their expected future income by attending a university offering low quality, and thereby reduce the amount of debt to be repaid.
Subjects: 
education
university
mobility
liquidity constraint
debt relief
JEL: 
H75
I23
Document Type: 
Working Paper

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