Income contingent student loans for Thailand: Alternatives compared

Abstract

This paper illustrates the extent of implicit taxpayer subsidies under four possible income contingent loan (ICL) arrangements for Thailand: TICAL, implemented in 2007 only, a variant of TICAL, and two alternative ICL schemes. The implicit taxpayer subsidy calculated with respect to average graduate earnings for TICAL-type arrangements is between 25-40 per cent; however, the average implicit subsidies for the two alternatives are close to zero. When account is taken of disaggregated graduate earnings, the subsidies for TICALtype schemes increase to about 30-55 per cent. The subsidy is between 3-18 per cent for our alternative ICLs, depending on the form of the real rate of interest incurred. These results show that there is a viable ICL alternative to TICAL, which are of greatest benefit for low levels of debt. When the debt is relatively large the subsidies of even well designed schemes can be as high as 50 per cent.

Student loan reforms for German higher education: financing tuition fees

“…This is of importance in comparisons of different student loan policies, with mortgage-type loans being quite different to income contingent loans in this respect. This is due to the fact that the latter are explicitly designed to avoid high repayment burdens and this is achieved through per period debt servicing obligations as a proportion of income being capped by legislation (Chapman and Lounkaew, 2010a).…”

“…For example, Chapman and Lounkaew (2010a) found an R 2 of around 0.4 for Thai earning functions; a plethora of other earnings function studies typically explain no more than 20-30 percent of the variance.…”

“…20 For recent analyses see Ziderman (2003) and Chapman and Lounkaew (2010a Second, Ziderman (1999) suggests that loan conditions need to be set so as "...to avoid imposing unduly harsh repayment burdens on borrowers..." (page 82). Third, it is argued in Baum and Schwartz (2006) (a) "A rough yardstick, used in several countries, is that loan repayments should not exceed 8 to 10 percent of a graduate's income, and that this should determine the maximum debt that students may incur" (Woodhall, 1987, page15); and (b) Salmi (2003) notes that in Venezuala the government loan agency "...has established 15 percent as the ceiling for monthly repayments."…”

Estimating Taxpayer Subsidies and Individual Repayment Burdens of a Student Loan Program in Spain

“…There are 1,422 people who hold a Master's degree in SHF2008. Following Chapman and Lounkaew (2010) and Chapman and Sinning (2012), we have excluded people who are either self-employed, in education or recorded as having zero income even though they are employed 3 . After exclusion, we have a sample of 693 Master degree holders.…”

Student Loans in a Tiebout Model of Higher Education

“…In this literature, specific attention is granted to quantifying the implicit subsidies involved and the repayment burdens induced by loan schemes employed in various countries. For example, such computations are provided for Australia (Chapman, 1997), Thailand (Chapman and Lounkaewa, 2010), Germany (Chapman and Sinning, 2011), and in an international comparison (Shen and Ziderman, 2008). On the theoretical side, an income contingent repayment of the loan smoothes consumption and provides insurance against income risks (Jacobs, 2002;Chapman and Sinning, 2011).…”