Alison Johnston (Oregon State University, Corvallis, USA) and Nicholas Barr (London School of Economics and Political Science, UK) published in Journal of Higher Education Policy and Management Volume 35 Issue 2 (April 2013)
Abstract
In this paper, we consider lessons for other countries about the design of student loans with income-contingent repayments (i.e. repayments calculated as x per cent of each borrower’s subsequent income).
Using a dataset of 20,000 simulated lifetime graduate earnings paths, we estimate the cost and distributional effects of reforms in England in 2012. Introducing a real interest rate produces significant savings, mostly from graduates in the middle and upper earnings deciles. But those gains are offset by an increase in the income threshold at which loan repayments start.
We conclude with discussion of policy changes to offset the increased cost of student loans (roughly £4,400 per graduate) within the current austerity climate, namely significant reductions in the higher education block teaching grant and a cap on the number of students.
Showing posts with label interest_subsidies. Show all posts
Showing posts with label interest_subsidies. Show all posts
Wednesday, 22 May 2013
Friday, 12 October 2012
The Higher Education White Paper: The Good, the Bad, the Unspeakable – and the Next White Paper
an article by Nicholas Barr (London School of Economics and Political Science) published in Social Policy & Administration Volume 46 Issue 5 (October 2012)
Abstract
This article argues that reforms of higher education finance for undergraduates in England introduced by the Blair government in 2006 provided a progressive strategy for achieving the central objectives of higher education of quality (better), access (wider) and size (larger).
Reforms in 2012 are a not a strategy but a collection of ad hoc arrangements. They include the good (a higher fees cap, a higher interest rate on student loans, better information and improved support for part-time study), the bad (abolishing most taxpayer support for teaching in the arts and humanities and the social sciences, and raising excessively the threshold at which loan repayments start) and the unspeakable (abolishing Education Maintenance Allowances and AimHigher).
The reforms are fiscally costly and hence perpetuate the central problem of capped student numbers, and will not stand the test of time.
The concluding section outlines the next White Paper.
Abstract
This article argues that reforms of higher education finance for undergraduates in England introduced by the Blair government in 2006 provided a progressive strategy for achieving the central objectives of higher education of quality (better), access (wider) and size (larger).
Reforms in 2012 are a not a strategy but a collection of ad hoc arrangements. They include the good (a higher fees cap, a higher interest rate on student loans, better information and improved support for part-time study), the bad (abolishing most taxpayer support for teaching in the arts and humanities and the social sciences, and raising excessively the threshold at which loan repayments start) and the unspeakable (abolishing Education Maintenance Allowances and AimHigher).
The reforms are fiscally costly and hence perpetuate the central problem of capped student numbers, and will not stand the test of time.
The concluding section outlines the next White Paper.
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