Dearden, L;
Chapman, BJ;
(2017)
Conceptual and Empirical Issues for Alternative Student Loan Designs: The Significance of Loan Repayment Burdens for the US.
The ANNALS of the American Academy of Political and Social Science
, 671
(1)
pp. 249-268.
10.1177/0002716217703969.
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Abstract
In this article, we compare the two main types of student loans used to finance postsecondary education: mortgage-type loans, which are repaid over a set period of time and mainly used in the United States; and income-contingent loans, which are repaid depending on students’ future income and used in Australia and England. We argue that the major concern with mortgage-type loans is the repayment burden that falls on students. Repayment burden—the proportion of a debtor’s income required to repay loans—is fundamental to the assessment of student loan systems because it affects the probability of students defaulting on loan repayment, and because it bears on debtors’ consumption and standard of living. We show that Stafford loans imply extremely difficult financial circumstances for a minority of U.S. loan recipients, and that income-contingent loans can solve those problems. The financial benefits of income-contingent loans are illustrated through a hypothetical student loan experience.
| Type: | Article |
|---|---|
| Title: | Conceptual and Empirical Issues for Alternative Student Loan Designs: The Significance of Loan Repayment Burdens for the US |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1177/0002716217703969 |
| Publisher version: | https://doi.org/10.1177/0002716217703969 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| Keywords: | student loan design, repayment burdens, income-contingent loans |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > School of Education UCL > Provost and Vice Provost Offices > School of Education > UCL Institute of Education UCL > Provost and Vice Provost Offices > School of Education > UCL Institute of Education > IOE - Social Research Institute |
| URI: | https://discovery.ucl.ac.uk/id/eprint/1546203 |
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