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ERIC Number: ED503697
Record Type: Non-Journal
Publication Date: 2007-Dec-6
Pages: 39
Abstractor: As Provided
Reference Count: N/A
ISBN: N/A
ISSN: N/A
Financing Higher Education in the United States. OECD Economics Department Working Papers, No. 584
Tulip, Peter
OECD Publishing (NJ1)
America's higher education system is among the best in the world. Nevertheless, there is scope for improvement. In particular, there appear to be substantial financial barriers to higher education despite large government expenditures aimed at promoting access. Policy makers have proposed addressing these barriers by increasing student grants. However, grants are costly, inefficient, inequitable and ineffective. Income tax concessions and state government subsidies suffer from similar problems. In contrast, international best practice seems to be converging on student loans with repayments that vary according to income. Income-contingent loans facilitate access to college at low fiscal cost and without the inefficiency and inequities that accompany grants, subsidies or tax concessions. At the same time, they do not discourage risk-averse or uninformed students in the way that conventional loans do. The United States has an income-contingent loan programme that should be expanded. While the design of repayments could be improved, the main problem with this programme is that lending limits are too low. Higher limits, especially for unsubsidised direct loans, would benefit students and promote access at little cost to the government. Were a good system of loans in place, then less cost-effective means of promoting access, such as grants and tax concessions, should be cut back. An annex includes: Implementation of Income Contingent Loans. (Contains 6 tables, 8 figures, 2 boxes, and 23 notes.)
OECD Publishing. 2, rue Andre Pascal, F-75775 Paris Cedex 16, France. Tel: +33 145 24 8200; Fax: +33 145 24 8500; Web site: http://www.oecd.org/publications http://www.sourceoecd.org
Publication Type: Reports - Research
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Organisation for Economic Cooperation and Development
Identifiers - Location: United States