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Refinancing Europe’s higher education through deferred and income-contingent fees: an empirical assessment using Belgian, German and UK data

Vandenberghe, Vincent and Debande, O. (2007) Refinancing Europe’s higher education through deferred and income-contingent fees: an empirical assessment using Belgian, German and UK data. CASEpapers, CASE/124. Centre for Analysis of Social Exclusion, London School of Economics and Political Science, London, UK.

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Identification Number: CASE/124

Abstract

The arguments for refinancing the European Union’s (EU) higher education via higher tuition fees largely rest on preserving the profitability of the educational investment and offering deferred and income-contingent payments. Using income survey datasets on Belgium, Germany and the United Kingdom (UK) we first estimate how graduates’ private return on educational investment is likely to be affected by higher private contributions. We then evaluate the effect of income-contingent and deferred payment mechanisms on lifetime net income and its capacity to account for graduates’ ability to pay, considering numerous ways of financing the cost of introducing income-contingency. Our analysis reveals that increasing individuals’ contributions to higher education costs, through income-contingent and deferred instruments, does not significantly affect the private rate of return of heterogeneous graduates, allows for payments to be indexed to ability to pay, and can be implemented in ways that minimize the risk of adverse selection. These findings prove robust to significant variations between countries’ unharmonised higher education institutional structures.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk/case
Additional Information: © 2007 The Author
Subjects: L Education > L Education (General)
JEL classification: I - Health, Education, and Welfare > I2 - Education > I28 - Government Policy
H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education
Sets: Collections > Economists Online
Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Date Deposited: 30 Jun 2008 13:51
Last Modified: 22 May 2012 16:37
URI: http://eprints.lse.ac.uk/id/eprint/6211

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