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ERIC Number: EJ778285
Record Type: Journal
Publication Date: 2007-Dec
Pages: 20
Abstractor: Author
Reference Count: 22
ISSN: ISSN-0964-5292
Deferred and Income-Contingent Tuition Fees: An Empirical Assessment Using Belgian, German and UK Data
Vandenberghe, V.; Debande, O.
Education Economics, v15 n4 p421-440 Dec 2007
This paper is a numerical exploration of the following. Assume, in the European Union context, that decision-makers want to spend more on higher education via higher tuition fees, but also want payments to be deferred and income-contingent. There are several possible ways to achieve this. First, ask graduates to repay a fixed amount each year if their current net income is above a certain threshold - income-contingent loans (ICL). Second, ask former students to repay a fixed proportion of their income - human capital contracts (HCC). What are the respective distributional properties of these policies, and how do they compare with traditional financing through income taxation? This paper shows that, irrespective of major variations between countries with different higher education, labor market and fiscal structures, with income taxation non-graduates pay more that 50% of the increased higher-education costs. It also shows that the HCC and ICL have vertical equity properties because non-graduates do not pay, but also because the income contingency principle on which they are based redistributes income among heterogeneous graduates. Finally, the paper shows that HCC are the best way to take account of graduates' ability to pay. It also reveals, however, that the ICL can be made to be almost as equitable. (Contains 4 figures, 7 tables, 27 notes, and 1 appendix.) [Research for this article was supported by a grant from the Belgian Federal Government.]
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Publication Type: Journal Articles; Reports - Evaluative
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Location: Belgium; Germany; United Kingdom