Abstract
We assess the implementation of income contingent loan (ICL) schemes for higher education in a context characterized by two main features: a formerly tuition-free system and a great heterogeneity in the quality and cost of higher education. In that case, ICL implementation leads to a trade-off between increasing ‘career’ equity in terms of collective public spending versus individual gains and widening low education traps by reducing the incentives to pursue higher education. We rely on a dynamic microsimulation model to evaluate the degree to which low education traps are enlarged by the implementation of ICLs in France. We conclude that the risk of such traps getting larger is very low.
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