ERIC Number: ED081379
Record Type: RIE
Publication Date: 1970-Jan
The Repayment Period for Loan-Financed College Education.
Balderston, F. E.
The author demonstrates mathematically that shifting from a grant to loan financing system for students lengthens the time before a graduate breaks even. The implication is that all loan financing for which the repayment is concentrated in the earlier years of working life has some deterrent effect upon college attendance because the net payoff is concentrated in the later part of working life. Since short amortization periods impose heavy burdens of cash outflows on the student and since expectations are not always correct, the author urges that loan financing of higher education be tempered by spreading risks and basing repayment on contingent income or providing for some kind of forgiveness arrangement to compensate insofar as possible for the following considerations: (1) pessimistic future income forecasts; (2) probabilistic events such as illness and disability; (3) the choice of socially valuable but low-income occupations at the time of the occupational decision after college is completed (and this might include the choice of child-bearing and child-rearing for women); and (4) the presence of high discount rates among some students. (Author)
Descriptors: Educational Finance, Financial Support, Higher Education, Income, Loan Repayment, Student Costs, Student Loan Programs
Ford Foundation, 2288 Fulton Street, Berkeley, California 94720
Publication Type: N/A
Education Level: N/A
Sponsor: Ford Foundation, New York, NY.
Authoring Institution: California Univ., Berkeley. Ford Foundation Program for Research in Univ. Administration.