The benefits of deferring the payment of higher-education costs are increasingly acknowledged as a way to overcome student-borrowing constraints. Since higher education is a risky investment and students are generally risk averse, the repayment arrangements proposed in the literature frequently include some insurance. In a competitive environment, preventing adverse selection may require coercion to join the scheme or the use of public funds (i.e. contributions from non-students) to make the scheme attractive to all students. Alternatively, when the number of higher-ability students is low, students can be given the option to choose among arrangements that include different degrees of insurance. (Contains 3 figures and 4 notes.)