What is the impact of repaying income-contingent student loan debt on graduates’ lives? Lessons from England

There is significant irresolution in many countries concerning the design of student loan schemes. In no country recently has there been more uncertainty as to the form that loans should take than Thailand. The Student Loans Fund (SLF), a conventional approach to financing, was introduced in 1996, discontinued at the end of 2005, and re-introduced in 2007. In its place an income contingent loan (ICL) was implemented for one year only, 2006. As part of this debate we contribute to an understanding of the repayment burdens associated with the SLF in Chapman, Lounkaew, Polsiri, Sarachitti and Sitthipongpanich (in this issue) . There are important issues with all ICL, and in this paper we consider the critical matter of interest rate subsidies. These are calculated for four different possible ICL arrangements for Thailand: the Thai Income Contingent and Allowance Loan (TICAL), a variant of TICAL, and two alternatives. With a broad-brush approach the subsidies for TICAL-type arrangements and for current debt levels turn out to be between 25 and 40 per cent, but are about zero for our suggested alternative ICLs. Using a better, more disaggregated, approach, subsidies for TICAL-type schemes are estimated to be about 30–55, and 3 and 18 per cent for our alternative ICLs. But with very large debts, the subsidies of all schemes are very high, implying that ICL are likely to be expensive until Thai graduate incomes rise. Importantly for equity however, the interest rate subsidies are delivered to graduates with relatively low lifetime incomes.

Table of Contents List of Figures List of Tables Foreword Notes on Contributors Introduction Part I: Inequality, Poverty, and Security 1. The UTIP Global Inequality Data Sets 1963-2008. Updates, Revisions and Quality Checks James K. Galbraith, Beatrice Halbach, Aleksandra Malinowska, Amin Shams and Wenjie Zhang 2. Multidimensional Poverty Measurement: The Mexican Wave Gonzalo Hernandez Licona 3. Inequality, Economic Growth and Natural Ressources Rent: Evidence From The Middle East and North Africa Hamid E. Ali and Sara M. Sami 4. Inequality Impacts of Oil Dependence in the Mena Sevil Acar 5. Housing and Saving in Retirement Across Countries Makoto Nakajima and Irina A. Telyukova Part II: Income Contingent and Student Loans 6. Income Contingent Loans Joseph E. Stiglitz 7. Income Contingent Loans as a General Risk Management Instrument Bruce Chapman 8. Utilising the Transactional Efficiencies of Contingent Loans - A General Framework for Policy Application Richard Denniss 9. Income Contingent Loans for Social Policy: the Case of Paid Parental Leave Timothy Higgins 10. Illustrating Trade-Off Between Interest Rates and Aggregate Loan Recovery of the Student Loans Fund in Thailand Kiatanantha Lounkaew 11. The Financial Capacity of German University Graduates to Repay Student Loans Mathias G. Sinning Index

Income Tax, Income Contingent Education Loans and the Taxpayer Parallax

The cost of education is rising, increasing student financial aid and debt for students pursuing higher education. A few studies have assessed the impact of student debt in medicine, physical therapy and social work, but little is known about the impact of student debt on genetic counseling students and graduates. To address this gap in knowledge, a web-based study of 408 recent alumni of genetic counseling programs in North America was conducted to assess the impact of student debt on program, career and life choices. Over half (63 %; n = 256/408) of the participants reported that loans were extremely important in their ability to attend their training program, with most using subsidized loans no longer available to current graduate students. While participants were generally satisfied with their genetic counseling education, 83 % (n = 282/342) of participants with student debt reported feeling burdened by their debt, which had a median of $40,000-$50,000. This debt is relatively close to the median starting salary reported by survey participants ($45,000-$50,000), breaching the "20-10 rule" that states student debt should not exceed 20 % of annual net income. In response to this critical issue, we propose recommendations for the genetic counseling field that may help alleviate student debt impact and burden.

Since the late 1990s, the number of college student loan debtors has increased rapidly in Japan. Despite the uniqueness of Japanese higher education policies in terms of tuition levels and heavy reliance on educational loans rather than grants, few studies have focused on the influence of student loans on adult youths’ lives. This study is the first to provide a detailed analysis of the relationship between student loan debt and youth life events. We explored the impact of student loan debt on family formation, using a data set of college graduates collected in 2017. We employed survival analysis methods to understand the relationship between student loan debt and marital decisions, and negative binomial models to analyze the impact of this debt on childbearing. The results showed that 2-year college graduate women with student loan debt were more likely to delay marital decisions than women without student loan debt. Taking out student loans also had a negative correlation to childbearing, which was also stronger for 2-year college graduate women. In conclusion, this study revealed that the Japanese government’s reliance on student loans has unexpected consequences. Even following recent reforms, student loan debt continues to be a major financial burden for young Japanese people and is likely to negatively affect family formation in Japan, which has already seen a decline in marriage and fertility rates over the last few decades. Our results call for additional policies to mitigate the negative influence of the Japanese college student aid system.

The Japanese higher education sector has seen increases in tuition with stagnant household incomes in a society where family support for university students has been the norm. Student loans from the government have grown rapidly to sustain the gradual increase in university enrollments. These time-based repayment loans (TBRLs) have created financial hardship for increasing numbers of loan recipients and their families. There is some evidence that prospective students from low-income households are forgoing a university education to avoid student loan debt. The Japanese government has introduced some measures including grants and a partial income-contingent loan (ICL) scheme to help alleviate these problems. While the ICL scheme is a positive development, this paper shows that it requires further refinement and broader coverage if it is to adequately address the challenges facing higher education financing in Japan. We show that an affordable and universal ICL system could be introduced in Japan that avoids problems with the current partial income-contingent loan scheme and would help alleviate access issues for those from disadvantaged backgrounds. Importantly, the unique features of the Japanese labor market have to be carefully considered, especially the large gender wage gap for married women. By introducing dynamics into modelling graduate earnings and using carefully selected parameters, we show that it is possible to have a universal ICL which achieves a balance between access and affordable repayment with minimal long-run costs to taxpayers.

The Japanese higher education sector has seen increases in tuition with stagnant household incomes in a society where family support for university students has been the norm. Student loans from the government have grown rapidly to sustain the gradual increase in university enrolments. These time-based repayment loans (TBRLs) have created financial hardship for increasing numbers of loan recipients and their families. There is some evidence that prospective students from low-income households are forgoing a university education to avoid student loan debt. The Japanese government has introduced some measures including grants and a partial income-contingent loan (ICL) scheme to help alleviate these problems.While the ICL scheme is a positive development, this paper shows that it requires further refinement and broader coverage if it is to adequately address the challenges facing higher education financing in Japan. We show that an affordable and universal ICL system could be introduced in Japan that avoids problems with the current partial income-contingent loan scheme and would help alleviate access issues for those from disadvantaged backgrounds. Importantly, the unique features of the Japanese labor market have to be carefully considered, especially the large gender wage gap for married women. By introducing dynamics into modeling graduate earnings and using carefully selected parameters, we show that it is possible to have a universal ICL which achieves a balance between access and affordable repayment with minimal long-run costs to taxpayers.

The international emigration of skilled workers can lead to a flight of human capital from developing countries or from developed countries going through economic difficulties, and this is highly regressive. These source countries suffer both loss of this workforce and also usually bear the cost of public subsidies of higher education and other government investments, such as for pre-higher education subsidies, for such workers, only to have them emigrate after graduation. Even in countries with student loan schemes a limitation of current arrangements is that repayment of the debt continues only while the graduate is resident in the country in which they undertook their higher education. This paper considers a way of addressing the imbalances and regressively in the trade of human capital involving internationalisation of the collection of student loans through the taxation system contingent on income, a feature now of loan collection in many countries. Our purpose is to outline the design issues required and we focus on countries with well-established income contingent loan (ICL) schemes such as Australia, the UK and New Zealand. Such a scheme could be designed to require the emigrating graduate to take out an ICL repayment obligation in line with their remaining student debt at the time they are issued with an employment visa to the destination country. The ICL could then be repaid on the same terms as domestic students and the collected funds transmitted back to the country of origin, potentially to support higher education.

Feminist Studies 47, no. 3. © 2021 by Feminist Studies, Inc. 729 Leifa Mayers Gendered “Risk” and Racialized Inheritance: Toward a Feminist Analysis of Debt in US Higher Education The financial aid system in the United States has expanded significantly in recent years, propelled by both the increasing costs of higher education and the greater social and economic emphasis placed on obtaining a bachelor’s degree. Over the past two decades, the percentage of undergraduate students who completed college with debt has more than doubled, to 65 percent, and graduates in the class of 2018 had an average of $29,200 in debt.1 As student debt has expanded, political debates about this crisis and its effects have burgeoned. Recent conversations about how to reform the student loan system have increasingly centered on how the responsibility for risk should be allocated among borrowers, institutions of higher education, and lenders. While some researchers urge colleges and universities to take responsibility for high rates of default by student borrowers, others call upon students to “share[e] responsibility for their personal choices”2 and 1. Veronica Gonzalez, Lindsay Ahlman, and Ana Fung, Student Debt and the Class of 2018: 14th Annual Report, (Oakland, CA: The Institute for College Access and Success, September 2019), 4. 2. Carlo Salerno, “Let’s Fund College the Same Way Investors Fund Start-Ups,” Forbes, August 19, 2015. 730 Leifa Mayers mitigate their own risk by choosing remunerative majors and careers.3 Prominent policy researchers have promoted “income share agreements ,” through which private investors exchange up-front funding for a percentage of future income that is paid back over a period of time following graduation.4 Meanwhile, recent proposals to reform higher education lending have included “institutional risk-sharing,” which tethers institutional viability to graduation and employment outcomes.5 These political and policy discourses are intertwined with materialities of risk in an increasingly financialized system of higher education. Through a series of legislative reforms that began in 1978, the opportunity to discharge most federal and private student loans in bankruptcy was first delayed and then eliminated.6 Unlike car and house loans, student loan debt is secured not by property, but by the person and their future labor.7 Thus, not only is the magnitude and pervasiveness of student loan debt “financializing” student life, but it also refashions student subjects as entrepreneurs and risk managers.8 While the risk attendants of debt operate differently in student loan borrowing than speculative financial markets, they nonetheless inflect student borrower subjectivities. Martin and colleagues describe the consolidation and dispersal of risk as primary instruments of private wealth generation within finance capitalism.9 Whereas securitization bundles 3. Joel Best and Eric Best, review of Game of Loans: The Rhetoric and Reality of Student Debt, in Beth Akers and Matthew M. Chingos, Sociology 54, no. 4 (2017): 373. 4. Miguel Palacios, Tonio DeSorrento, and Andrew P. Kelly, Investing in Value, Sharing Risk: Financing Higher Education Through Income Share Agreements (Indianapolis, IN: Center on Higher Education Reform, American Enterprise Institute, February 2014), 7–12; Investing in Student Success Act of 2017, S. 268, 115th Cong. (2017); Alison Griswold, “Because You’re Worth It: Afraid of Student Loan Debt? Sell Stock in Yourself Instead,” Slate, April 10, 2014. 5. Student Protection and Success Act, S. 1525, 116th Cong. (2019); Student Protection and Success Act, S. 2231, 115th Cong. (2017). 6. The Bankruptcy Reform Act, Pub.L. 95–598, 95th Cong. (1978); Bankruptcy Abuse Prevention and Consumer Protection Act, Pub.L. 109–8, 109th Cong. (2005). 7. Jeffrey J. Williams, “Student Debt and the Spirit of Indenture,” Dissent 55, no. 4 (2008): 75. 8. Randy Martin, Financialization of Daily Life (Philadelphia: Temple Press, 2002), 1. 9. Randy Martin, Michael Rafferty, and Dick Bryan, “Financialization, Risk and Labour,” Competition and Change 12, no. 2 (2008): 121. Leifa Mayers 731 disparate financial assets and facilitates their movement through the market, derivatives spread out financial value to minimize the effects of market volatility. Thus, investors can purchase bundles of loans in the form of bonds and quickly resell or disperse their value. Although federal student loans are not similarly commodified, they represent financial risk that is affixed to the individual borrower...

PurposeResearch shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The rationale for this study is to determine the factors related to owing student debt in retirement, given the adverse effects on the well-being of retired households.Design/methodology/approachThe study utilizes pooled cross-sectional data from the 2015 and 2018 U.S. National Financial Capability Study. The empirical analysis uses a sample of retired Americans aged 65 years and older (N = approximately 8,000) and estimates two-block logistic regression models to examine the effects of demographic, socioeconomic and behavioral factors on student loan indebtedness in retirement. A sensitivity analysis is performed for the subsample of retirees holding student debt for their children's education. Statistical interpretations use odds ratios.FindingsThe findings indicate that financial literacy, age, homeownership and high subjective financial knowledge are associated with a low likelihood of holding student loan debt in retirement. However, being Black, having postsecondary education, having difficulty covering expenses, having financially dependent children, having high-risk preferences and spending more than income increase the likelihood of holding student debt in retirement. The ensuing discussion will assist financial planners and educators identify practical ways to shape decisions regarding student loan debt in retirement.Research limitations/implicationsThe amount of student loan debt is unavailable in the dataset for analysis. One cannot infer causal relations from the study. The factors examined do not reflect the time the student loan was obtained.Originality/valueThe study focuses on the determinants of student loan indebtedness among retired Americans rather than young adults or older adults on the verge of retirement. The paper enhances the understanding of student loan holdings in the decumulation phase of the life cycle. Many US individuals have low retirement savings from which they draw a retirement income. The more the student debt burdens on retired Americans, the greater the likelihood of outliving their resources and experiencing poverty.

ABSTRACTMillions of student loan borrowers worry about their loan repayments. Previous research has focused on student loan debt's impact on post‐college outcomes, overlooking psychological aspects like repayment worry. Utilizing data from the 2021 National Financial Capability Survey (n = 2582), we developed and tested a theoretical model for understanding the determinants of student loan repayment worry (repayment worry) and the moderating effects of gender on the association between stressors (financial hardship and student loan delinquency) and repayment worry. Logistic regression showed that financial hardship and student loan delinquency are significant predictors of repayment worry. The coping resources we studied—financial self‐efficacy, financial satisfaction, and household income—were significantly linked to lower repayment worry, except for financial capability. Notably, gender was a significant moderator of the financial hardship—repayment worry association, with males experiencing stronger effects than females, but did not moderate the student loan delinquency—repayment worry association. Implications for mitigating repayment worry are offered.

The role of income contingent loans (ICLs) as a risk-management device is being increasingly emphasized. Many countries have adopted ICLs to finance higher education and alternative uses have been proposed. In this chapter I first outline the main features of existing ICL schemes for higher education and discuss alternative designs. I then identify issues to be addressed when considering novel applications. Many existing ICL schemes for higher education imply large implicit subsidies: the interest rate is often highly subsidised and the shortfall from non-repayment is typically financed from general taxes. Increasing the share of the cost borne by successful graduates could help alleviate the negative consequences of current designs, but the extent to which this is feasible depends on whether there are significant moral hazard and adverse selection effects. These problems have traditionally seemed relatively minor in the higher education context but could be quite significant for some of the proposed applications.

Millions of South Africans endured numerous injustices throughout apartheid, with education being one. Since the beginning of the 21st century, the value of Higher Education (HE) has grown, and it is believed that giving more people access to it will benefit the economy of the country as well as their social status and quality of life. This has compelled numerous governments to create student loan schemes in order to assist deserving and needy people and increase their access to HE. HE may be the only option to escape poverty in South Africa yet, in order to continue their study; students require money. Some students must rely on parental or family support, part time employment, savings, or bank loans to pay for their studies. One type of financial aid intended to assist students in paying their tuition and other expenses, is student loans. Student loans are another means to pay for university education. There may be severe repercussions for the student who is unable to make prompt payments, which may take many different forms. Furthermore, when signing student loan contracts, through banks, government-funded schemes, such as the National Student Financial Aid Scheme (NSFAS), private lenders, University Financial Aid, Bursaries and Scholarships, students face various difficulties. The aim of the study was to investigate the effects of consumer protection legislation on the challenges pertaining to student loan debt in the South African HE sector. The objectives of the study were to explore HE student challenges in respect of student loan contracts and the resultant student loan debt; the study analysed the implications of selected consumer legislation (including the National Credit Act 34 of 2005 and the Consumer Protection Act 68 of 2008) on such challenges faced by HE students, furthermore, the study explored measures to protect students and make future improvements in the broader South African student loan scheme in HE. The target population for this study comprised of full-time students from all of the Durban University of Technology campuses, viz. ML Sultan, Steve Biko, Ritson, Brickfield, City campus and the Pietermaritzburg campus. A case study research design was employed for the current study. This study adopted non-probability sampling techniques, i.e. a judgemental or purposive sampling method and a convenience sampling method. A questionnaire, which is mainly quantitative in nature, was utilised for this study. The questionnaire was developed to achieve the study's objectives. The study focused on collecting and analysing, quantitative data as a method and is being presented and analysed using quantitative techniques. Cronbach’s Alpha was used to determine reliability of the questionnaire. The Statistical Package for the Social Science (SPSS) package version 27.0 was used to analyse the quantitative data. Data was obtained from 306 respondents and analysed and interpreted using descriptive and inferential statistics. The results from the study were presented using graphs and tables. This study will be beneficial to students as well as HEIs as it highlights the challenges faced by students and possible measures to protect students and make improvements in the broader South African students’ loan scheme. The findings from the study revealed that the respondents were unaware of the consequences to unpaid student loan debt, including the fact that they may not be able to complete their studies; that if their studies have been completed, the university will withhold the certification, and that not paying their student loan could prevent them from graduating. Furthermore, the respondents experienced challenges such as the contracts not being in a plain and understandable language, amongst many others. Based on the findings, recommendations are made on the measures that can be implemented to protect students and to make future improvements in the broader South African student’s loan scheme in HE

Investigating the impact of student loan debt on new practitioners

Income contingent student loans for Thailand: Alternatives compared